Daily Afternoon Report 31.01.2017
The euro hit the day’s highs against the U.S. dollar on Tuesday after President Donald Trump’s top trade adviser accused Germany of currency exploitation.
EUR/USD was up 0.36% at 1.0733 from around 1.0703 earlier.
The single currency also surged higher against the pound, with EUR/GBP up 0.75% at 0.8628.
The euro jumped after Peter Navarro, the head of Trump’s new National Trade Council, said Germany is using a “grossly undervalued” euro to exploit the U.S. and its trading partners.
His remarks indicated that the new administration is focusing on currencies as part of its approach on trade relations.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, traded lower in the wake of the remarks, down 0.31% at 100.11.
Earlier Tuesday, official data showed that economic growth and inflation in the euro area picked up in December.
The annual rate of euro area inflation rose to 1.8%, up from 1.1% in December, the highest since February 2013.
The European Central Bank targets inflation of close to, but just below 2%.
Underlying inflation remained steady at 0.9% year-on-year.
Lagging underlying inflation means that the ECB is unlikely to start tapering its stimulus program until next year.
A separate report showed that euro zone gross domestic product rose by 0.5% in the three months to December, up from 0.4% in the third quarter.
Meanwhile, the euro area unemployment rate fell to 9.6% in December from 9.8% in November.