Euro Falls after Draghi’s Comments Reinforce European Central Bank QE
The European Central Bank’s policymakers will review the degree of monetary stimulus they have deployed when they meet in December and remain willing and able to act if needed, ECB President Mario Draghi said on Tuesday.
The euro was up 0.1 percent at $1.1014 while the yen was flat at 120.60 per dollar.
“Broadly speaking the economy seems to be doing okay, but the real concern is that inflation remains subdued and it will take longer to get it back to target”, said Ben May at Oxford Economics.
“Another possible channel for transmitting negative shocks to the euro area is confidence effects, where, for instance, capital outflows can be triggered by adverse confidence shocks, leading to a tightening of financial conditions in emerging markets and a further slowdown of euro area foreign demand”, the ECB said.
The kiwi weakened 0.4 per cent to 66.41 USA cents after tumbling 1.2 per cent in the previous session. Against a basket of six major rivals, the dollar stood at 97.42, up about 0.3 percent and heading toward a 2-1/2-month high of 97.818 touched last week.
Asian shares surged on Wednesday following gains on Wall Street, with Japanese and Chinese stocks leading the way, while investors’ stronger appetite for riskier assets pushed up USA debt yields. The CSI 300 index of largest listed companies in Shanghai and Shenzhen closed 1.6 percent lower and the Shanghai Composite index lost 1.7 percent.
European shares had a positive start to the week after business surveys (PMIs) from around the eurozone beat expectations, while Commerzbank’s better-than-expected results brightened a mixed picture for earnings season.
As reported at 10:55 am (GMT) in London, the EUR/USD was up 0.14% to trade at $1.1025; in today’s trading, the pair has ranged from $1.0999 to $1.1055.
“Yields went up, which helped lift the dollar ahead of United States payrolls data later in the week”, said Ayako Sera, senior market economist at Sumitomo Mitsui Trust Bank.
While data showed United States manufacturing activity slowed in October for a fourth month to a 2-1/2-year low, a rise in new orders offered hope.
The pan-European FTSEurofirst stocks index FTEU3, which gained about 8 percent in October for its best month in more than six years, fell 0.5 percent in early trade.
Gold hit its lowest since early October on bets of a Fed rate rise.
Ben Fox, a partner in Allen & Overy’s finance practice said: “Banks, with their deep-rooted relationships and huge distribution networks, and indeed law firms have a crucial role to play in bringing market participants up to speed”.
Meanwhile, a further decline in dairy prices and soft New Zealand jobs data battered its dollar currency.