CURRENCIES: Dollar Sinks To 9-month Low Against Euro
June 27 2017 - 11:06AM
Dow Jones News
By Anora Mahmudova, MarketWatch , Rachel Koning Beals
ECB's Draghi hints at early steps away from aggressive
stimulus
The dollar fell broadly Tuesday, marking a nine-month low
against the euro, as investors weigh what could be a shift away
from aggressive eurozone stimulus.
The euro gained after European Central Bank President Mario
Draghi said in a speech in Portugal that changes to the central
bank's accommodative posture may see the ECB move "not in order to
tighten the policy stance, but to keep it broadly unchanged." The
comments made in Sintra, Portugal, were viewed as being less
dovish, or accommodative, than Draghi's earlier speeches by some
analysts' accounts, and gave the euro a lift to its highest level,
briefly above $1.13, since September, according data from WSJ
Market Data Group.
"There was a very minor nuanced change in his tone, but it was
enough to impact the euro," said Neil Mellor, chief currency
strategist at BNY Mellon.
The euro was most recently changing hands at $1.1277, up 0.8%
compared with $1.1182 late Monday in New York.
The ICE Dollar Index , a measure of the currency against a
basket of six major rivals, was down 0.6% at 96.82, with the euro
holding the largest weighting in the dollar gauge.
Investors traded the dollar cautiously ahead of Federal Reserve
Chairwoman Janet Yellen's speech in London on Tuesday, set for 1
p.m. Eastern U.S. time, and any commentary backing up or
undermining what is expected to be at least one more interest-rate
hike from the Fed this year.
Philadelphia Fed President Patrick Harker will also speak in
London, while San Francisco's John Williams, who already signaled
his preference for higher U.S. rates in a speech this week, will
offer remarks in Australia. Data on home prices and consumer
confidence
(http://www.marketwatch.com/economy-politics/calendars/economic)
will be released at 10 a.m. Eastern. Their comments will come
against the backdrop of persistent concerns that inflation is
running below the Fed's expectations for a 2% rise.
"A lot depends on whether a decline in inflation is indeed
temporary, but the biggest risk to taking a positive view of the
economy is Italy. Once the ECB stops buying assets, Italy will be
on its own and the consequence of that is simply unknown," said
Mellor.
"This is no change in ECB rhetoric, which although it shifted to
a less dovish bias at the latest policy meeting it remained
committed to keeping rates at current low levels," said Charalambos
Pissouros, senior analyst with Iron FX. "Thus, we keep our view
untouched that the ECB is likely to continue to shift towards a
more sanguine bias at its upcoming meetings, provided that incoming
eurozone data remain solid."
In other currencies, the pound was worth $1.2764, up 0.4%
compared with $1.2721 late Monday.
The pound has gained marginally to start the week after U.K.
Prime Minister Theresa May reached a deal with Northern Ireland's
Democratic Unionist Party for its lawmakers to support the
Conservatives' minority government
(http://www.marketwatch.com/story/uks-dup-reaches-deal-to-support-minority-tory-government-reports-2017-06-26).
"We see the likelihood for [pound-dollar] to trade higher
heading into the Queen's Speech vote on Thursday and get closer to
$1.2850, given that the Tory-DUP accord lifts some political
uncertainty," said Pissouros. "If [pound-dollar] manages to break
above the $1.2755 resistance soon, then we may see it targeting our
next resistance of $1.2815."
Against its Japanese counterpart, the dollar strengthened
slightly against the yen, buying Yen111.92, up from Yen111.87 late
Monday in New York.
The dollar trimmed losses after data showing U.S. consumer
confidence had risen to Yen118.9 in June from Yen117.6 in May. But,
it was still broadly lower against the euro.
(END) Dow Jones Newswires
June 27, 2017 10:51 ET (14:51 GMT)
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