Forex News: Euro Rises As ECB Schnabel Signals ECB Rate

Euro Rises As ECB Schnabel Signals ECB Rate Hike

(RTTNews) - The euro strengthened against other major currencies in the early European session on Monday, after the European Central Bank policymaker Isabel Schnabel said that the bank would keep the interest rates unchanged and the next move is likely to be a hike.

While speaking at an interview, the ECB Schnabel said that the European Central Bank (ECB) lowered rates by a total of two percentage points in the year ending in June to keep inflation from falling too low. However, since then, it has put these rate reductions on hold and has been considering whether it has done enough or if more may be required.

According to Schnabel, both markets and survey participants expect that the next rate move is going to be a hike, albeit not anytime soon.

"I'm rather comfortable with those expectations," she added.

She stated that because the economy performed better than anticipated in the face of U.S. tariffs, risks to growth and inflation are skewed toward higher readings than those predicted by the ECB.

Additionally, Schnabel pointed out that while the economy is improving and fiscal policy is growing, the underlying inflation decrease has paused, setting the stage for price growth to pick up speed.

Investors focus their attention on interest-rate decisions from the U.S. Federal Reserve, the Swiss National Bank, the Reserve Bank of Australia and the Bank of Canada this week.

In economic releases, Germany's industrial production growth accelerated unexpectedly in October, official data showed.

Industrial output logged a monthly growth of 1.8 percent in October, Destatis reported.

Economists were expecting the increase to ease sharply to 0.2 percent from a revised 1.1 percent rise posted in September.

On a yearly basis, industrial production gained 0.8 percent, in contrast to the 1.4 percent decrease in September.

In the European trading today, the euro rose to 4-day highs of 0.8753 against the pound and 181.18 against the yen, from early lows of 0.8735 and 180.50, respectively. If the euro extends its uptrend, it is likely to find resistance around 0.88 against the pound and 183.00 against the yen.

Against the U.S. dollar and the Swiss franc, the euro edged up to 1.1672 and 0.9374 from early lows of 1.1639 and 0.9362, respectively. The euro may test resistance around 1.18 against the greenback and 0.95 against the franc.

Looking ahead, U.S. NY Fed 1-year consumer inflation expectations for the November is due to be released in the New York session.

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