EUR/USD near 1.38 after Inflation Numbers

The euro had its biggest monthly gain since April as higher-than-projected inflation spurred speculation the European Central Bank will refrain from additional monetary stimulus at a meeting next week.

The dollar had its worst month since September even after Federal Reserve Chair Janet Yellen reiterated in Senate testimony that the central bank is likely to maintain its strategy of gradually trimming bond purchases. China’s yuan decreased versus all except two of its emerging-market peers in February as the People’s Bank of China considers doubling the size of the currency’s trading band versus the dollar. The ECB meets March 6 in Frankfurt.

“The inflation numbers were better than expected, and some of the expectations for a rate cut next week have been tempered,” Brian Daingerfield, a Stamford, Connecticut-based currency strategist at Royal Bank of Scotland Group Plc, said yesterday in a phone interview. “Going into this week, there was building anticipation for an ECB rate cut.”

Bloomberg

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