(Adds data, analysts' quotes)
NEW YORK, March 10 The euro jumped to a
three-week high against the dollar on Friday after a report that
the European Central Bank had discussed the possibility of
raising interest rates before the end of its quantitative easing
Sources told Reuters some ECB policymakers had suggested
hiking rates from their current record lows before the end of QE
stimulus, but that the discussion was brief, and there was not
broad support for the idea.
The euro rose as high as $1.0677 against the dollar,
its strongest since Feb. 16. It was last at $1.0666, up 0.85
"I have no idea whether the reports are correct or not but
it shows where we are," said Axel Merk, president and portfolio
manager at Merk Hard Currency Fund in Palo Alto, California.
"It shows that the discussions (at the ECB) are leaning
towards, 'How do we get out of QE?' ... There's been a
fundamental shift, but it’s a fundamental shift that’s been
gradually sinking in."
Merk also noted that improving euro zone economic data has
supported the premise that inflation and growth may be
returning, which ECB President Mario Draghi highlighted in his
remarks on Wednesday following the central bank's March meeting.
The dollar index, which tracks the greenback against
six major world currencies, fell to a session low of 101.380
following the report on the ECB discussions.
The index had sunk earlier after the release of the February
U.S. non-farm payrolls report that showed wages rose less than
expected. That tempered expectations for a spate of interest
rate increases this year by the Federal Reserve.
The U.S. payrolls report showed employers added 235,000 jobs
last month, beating expectations of 190,000.
“It’s a very solid report; however, the dollar has failed to
appreciate given how market expectations were sky-high for a
robust report," said Joe Manimbo, senior market analyst at
Western Union Business Solutions in Washington.
"Once again the wage number continues to overshadow," he
added, "and with wages rising in lackluster fashion, that has
tempered expectations for the Fed to raise rates at a faster
pace this year."
Fed fund futures prices showed investors see a 93 percent
chance of an increase in U.S. overnight interest rates this
month, according to CME Group's FedWatch tool. But that number
was close to 90 percent before the data was released.
The greenback was little changed against the yen
after touching a seven-week high of 115.50 yen. The dollar last
traded at 114.83 yen.
(Reporting by Dion Rabouin and Gertrude Chavez-Dreyfuss;
Editing by Dan Grebler)