The decision of the senators of the 5 Star Movement, of the ruling coalition, to withdraw their support for Draghi during a confidence vote opened a political crisis on Thursday that will lead to his resignation. “The majority for the national unity that had supported this government since its creation ceased to exist. The confidence pact on which the action of this government is based has disappeared“, he explained.
News of Draghi’s resignation further hit the European Community currency, leading investors to take refuge in the green ticket, amid speculation that the Federal Reserve (Fed) will be even more aggressive and will raise its interest rates by a greater amount.
The European Commission on Thursday also cut its forecasts for economic growth in the euro area for this year and next.also revised upwards its inflation estimates, largely due to the impact of the war in Ukraine.
The euro fell to $1.0031after reaching $0.99, its weakest price since December 2002.
The European currency is expected to continue to weaken, as it suffers from higher rate hike prospects than other central banksincluding the European Central Bank.
“Right now, markets show a clear preference for the dollargiven the overall backdrop of geopolitical uncertainty, pressures in Europe from the energy supply situation and expectations of interest rate hikes in the United States,” said Shaun Osborne, chief currency strategist at Scotiabank.
Operators have raised the stakes that the Federal Reserve will be even more aggressive after Wednesday’s data showed that consumer prices United States annuals increased 9.1% in Junethe largest increase in more than four decades.
Fed funds futures now indicate a 71% chance of a 100 basis point rise at the July 26-27 Fed meeting, with a 29% chance of a 75 basis point rise.
Thursday’s data showed that US producer prices rose more than expected in Junedue to rising costs of energy products, but core inflation appears to have peaked.
The dollar also hit a 24-year high against the Japanese yen.the greenback rose 1.22% to 139.23 yen, as the Japanese central bank maintains a dovish stance that contrasts with aggressive moves by central banks around the world.
Source: Ambito
David William is a talented author who has made a name for himself in the world of writing. He is a professional author who writes on a wide range of topics, from general interest to opinion news. David is currently working as a writer at 24 hours worlds where he brings his unique perspective and in-depth research to his articles, making them both informative and engaging.
