Euro Rose Further on Draghi's Statement


Yesterday, Draghi gave his best hint as yet of a change in track and said that there is a good chance of the European Central Bank beginning the tapering of QE anytime quite soon.

Against the perceived safe-haven yen, the dollar slipped 0.3 percent to 112.090 after rising as high as 112.285 yen, its highest since May 17.

German stocks fell sharply on Wednesday as a slew of factors such as US policy uncertainty, the euro's strength against the dollar on the back of hawkish comments from ECB President Mario Draghi and a global ransomware attack that disrupted IT systems of companies across the world dented investors' appetite for risk.

Analysts said much-anticipated comments from Federal Reserve Chair Janet Yellen in London did not greatly impact the dollar.

They follow Yellen's increasingly hawkish tone and the bank's plan to wind down its bond-buying programme to suck excess cash out of financial markets.

The euro was up 0.5 per cent at a one-year high of US$1.1373 with FX traders waiting for another flurry of ECB policymaker speeches at a conference hosted by the central bank in Portugal. Reports on Wednesday, however, said that Draghi meant to signal tolerance for a period of weaker inflation, not an imminent policy tightening, according to sources familiar with his thinking.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was down 0.4 percent, pulling further away from more than two-year highs probed earlier this week.

Sterling GBP= was last trading at $1.2824, up 0.82 percent on the day.

The delay of the healthcare vote eroded expectations that President Donald Trump can succeed at realizing his agenda of tax reform and infrastructure spending, analysts said. South Korea's Kospi shed 0.3 percent to 2,386.03. The Shanghai Composite index in mainland China lost 0.6 percent to 3,173.20, while Australia's S&P/ASX 200 gained 0.7 percent to 5,755.70. Brent, the worldwide standard, was up 50 cents, or 1.1 percent, to $46.54 per barrel in London.

OIL: Benchmark U.S. crude was up 44 cents, or 1 percent, to $43.82 per barrel in NY.

"There's a vulnerable political and vulnerable economic backdrop (for the UK) and you layer on the more constructive attitude with respect to politics and economics in the euro zone and therefore we get euro sterling trending higher", said Rabobank strategist Jane Foley.

The problem for European Central Bank officials is that even with the fast growth of the Eurozone, the inflation rate is still low as it fell 1.4 percent in May, way below its under 2 percent mark.

The dollar index, which gauges the US currency against a basket of six major counterparts, edged down slightly on the day to 96.365 .DXY , well below its previous session high of 97.447. The dollar hit session high against Japanese yen at 112.47 per dollar before retreating back to trade at 112.12 in the late USA session.