News Column

Draghi saves euro again; losses reversed

February 6, 2014

The euro responded positivley to Mario Draghi`s comments at the ECB news conference on Thursday, although the bank repeated its pledge to keep rates low for an extended period. Risky currencies won the FX battle today, as the dollar lost grounds against its major counterparts like the euro, pound and the Japanese yen. Earlier today, the European Central Bank confirmed its forward guidnace, kept interest rates at present or lower levels and repeated its ready to act if necessary, in other words it hasn`t changed anything! Apparently, the emergency setting of monetary policy is still on, but why the euro is enjoying the ECB`s ultra-easy policy setting. Well, Draghi did it again! Nothing has changed in the ECB`s monetary policy, yet the single currency was saved by Draghi again for his rhetoric was kind of less downbeat than before, helping the EURUSD escape a false breakout and rally as high as 1.3617, the highest mark in like five days. The euro shaked off losses after the EURUSD fell as low as 1.3481 after the ECB stood pat on policy. However, the pair bounced back above 1.36-mark when Draghi dismissed deflation threat, besides he added that inflation outlook remains subdued. The ECB offset recent specualtion the bank will move to counter risk of deflation. Simultaneously, the Bank of England left its rates unchanged today. The British pound was little changed agains the dollar dolalr, but the BoE`s policy inaction helped EUR/GBP hit a three-week high of 0.8348. The US Dollar Index, which tracks greenback against a six-currency basket, as traders sought higher-yields following the kindly upbeat jobless claims report, which showed that fewer Americans filed for unemployment benefits last week. The USDIX was trading around 80.84, easing from the day`s high of 81.31 following the central bank decision and jobless claims report, which lays the ground for Friday`s employment report.


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Source: ICN.com Financial Markets


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