Month: June 2023

(C) Reuters. Saudi riyal, yuan, Turkish lira, pound, U.S. dollar, euro and Jordanian dinar banknotes are seen in this illustration taken January 6, 2020. REUTERS/Dado Ruvic/Illustration

By Hannah Lang and Joice Alves

WASHINGTON/LONDON (Reuters) – The euro recovered from a two-month low Thursday after European Central Bank (ECB) President Christine Lagarde said inflation remained too high and further policy tightening was necessary.

Data showed on Thursday that inflation in the 20 nations sharing the euro eased to 6.1% in May from 7.0% in April, below expectations for 6.3% in a Reuters poll of economists.

But the current level is still more than three times the ECB’s 2% inflation target.

“Today, inflation is too high and it is set to remain so for too long,” Lagarde said in a speech.

“We have made clear that we still have ground to cover to bring interest rates to sufficiently restrictive levels,” she added.

The ECB has raised base rates by a combined 375 basis points (bps) to 3.25% over the past year to combat runaway prices.

Money markets are pricing in an 85% chance of a 25 bps hike when the ECB meets on June 15. Another 25 bps hike is expected in July, according to Refinitiv.

“The euro is taking a bit of a ride higher,” said John Velis, FX and macro strategist at BNY Mellon (NYSE:BK). “There’s a sort of narrowing interest rate differential … when the ECB is expected to hike one or two more times and the [U.S. Federal Reserve] is more questionable about that.”

The euro was last up 0.36% to $1.07265, off a two-month low of $1.0635 touched on Wednesday after some European countries released national inflation data showing signs price pressures have eased.

FED TO PAUSE

The dollar drifted from a two-month high as investors trimmed bets the Federal Reserve will raise interest rates this month.

The dollar index, which measures the currency against a basket of six peers, fell 0.278% at 103.840, off a two-month high of 104.7 touched on Wednesday.

Fed officials pointed towards a rate hike “skip” in June, giving time for the U.S. central bank to assess the impact of its tightening cycle thus far against still-strong inflation data.

Markets are now pricing in a roughly 32% chance that the Fed will raise rates by 25 basis points at its upcoming meeting, compared with a near 67% chance a day ago, according to the CME FedWatch tool.

Limiting the dollar slide, the divided U.S. House of Representatives on Wednesday passed a bill to suspend the debt ceiling, and the focus now turns to how it will fare in the Democratic-led Senate.

“Our view is that … the U.S. government will avoid a default that could potentially derail the U.S. and also the global economy,” Carol Kong, a currency strategist at Commonwealth Bank of Australia (OTC:CMWAY), said.

“I think the dollar can gain a little bit more support on a successful vote today.”

Elsewhere, sterling was last trading at $1.25125, up 0.57% on the day, while the Australian dollar rose 0.53% versus the greenback at $0.654.

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Currency bid prices at 10:30AM (1430 GMT)

Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid

Previous Change

Session

Dollar index 103.8400 104.1500 -0.28% 0.338% +104.5000 +103.7000

Euro/Dollar $1.0726 $1.0689 +0.36% +0.11% +$1.0742 +$1.0662

Dollar/Yen 138.8700 139.3250 -0.35% +5.90% +139.9400 +138.4400

Euro/Yen 148.95 148.93 +0.01% +6.17% +149.6800 +148.6300

Dollar/Swiss 0.9091 0.9107 -0.19% -1.70% +0.9113 +0.9074

Sterling/Dollar $1.2511 $1.2441 +0.58% +3.47% +$1.2525 +$1.2401

Dollar/Canadian 1.3527 1.3576 -0.36% -0.17% +1.3585 +1.3510

Aussie/Dollar $0.6536 $0.6504 +0.53% -4.08% +$0.6549 +$0.6486

Euro/Swiss 0.9750 0.9733 +0.17% -1.47% +0.9753 +0.9713

Euro/Sterling 0.8570 0.8591 -0.24% -3.10% +0.8604 +0.8572

NZ $0.6036 $0.6021 +0.20% -4.98% +$0.6052 +$0.5991

Dollar/Dollar

Dollar/Norway 11.1310 11.0810 +0.51% +13.48% +11.2000 +11.0570

Euro/Norway 11.9408 11.8526 +0.74% +13.79% +11.9743 +11.8142

Dollar/Sweden 10.8655 10.8493 +0.44% +4.40% +10.9087 +10.8328

Euro/Sweden 11.6498 11.5982 +0.44% +4.49% +11.6614 +11.5830

(C) Reuters

By Davit Kirakosyan

Here is your Pro Recap of the biggest analyst picks you may have missed since yesterday: upgrades at Avis Budget, Q2, bluebird bio, Equitrans Midstream, and Financial Services.

InvestingPro subscribers got this news first. Never miss another market-moving headline.

Avis stock gains on Deutsche Bank’s upgrade

Avis Budget Group (NASDAQ:CAR) shares gained more than 2% yesterday after Deutsche Bank upgraded the company to Buy from Hold and raised its price target to $263.00 from $239.00, as InvestingPro reported in real time.

The firm mentioned that the stock has been “left behind without cause,” and emphasized the upgrade’s main focus on the company’s valuation.

Furthermore, the bank highlighted a potential catalyst in the form of expected share repurchases in the latter half of the year. Shares have significantly underperformed comparable travel and leisure sub-sectors year-to-date, lagging behind by an average of 2,400 basis points. The firm believes that the stock could attract investors looking to buy reasonably priced laggards as the S&P 500 sits near a 9-month high.

Q2 upgraded to Buy, shares surge 5%

Q2 (NYSE:QTWO) shares rose more than 5% yesterday after BTIG upgraded the company to Buy from Neutral with a price target of $36.00, highlighting its increasingly constructive view of the long-term outlook for the company.

The firm believes Q2’s guidance is now conservative and much of the potential downside has been stripped out, while growth upside is more tangible than in recent years.

2 more upgrades

Bluebird bio (NASDAQ:BLUE) shares jumped more than 6% premarket today after Barclays upgraded the company to Overweight from Equalweight and raised its price target to $8.00 from $7.00.

JPMorgan upgraded Intercorp Financial Services (NYSE:IFS) to Overweight from Neutral with a price target of $27.00.

Amid an endless firehose of market headlines, jump on the most important ones to fatten your profits: Always be the first to know with InvestingPro.

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(C) Reuters

By Davit Kirakosyan

Here is your Pro Recap of the biggest analyst cuts you may have missed since yesterday: downgrades at Target, Advance Auto Parts, Exxon Mobil, and US Steel.

InvestingPro subscribers got this news first. Never miss another market-moving headline.

Target downgraded at JPMorgan

JPMorgan downgraded Target (NYSE:TGT) to Neutral from Overweight and cut its price target to $144.00 from $182.00, as InvestingPro reported in real time. Shares closed down more than 2% on Wednesday.

The firm placed Target on Negative Catalyst Watch into the Q1 earnings last month on topline and margin concerns and came out of the quarter with H2 topline guidance concerns. Since then, the backdrop – from the consumer to share of wallet to disinflation – has, in total, gotten worse with share/traffic risk rising into the most important quarters of the year. As a result, the likelihood of further downward revisions is growing.