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FOREX-Euro rises after Draghi gives no hint of further easing
March 7, 2013 / 3:07 PM / 5 years ago

FOREX-Euro rises after Draghi gives no hint of further easing

* Euro rises as Spain hits top end of target at bond sale
    * ECB holds rates steady, no hint of further easing


    NEW YORK, March 7 (Reuters) - The euro rose on Thursday,
helped by healthy demand at a Spanish debt auction that eased
some investor concerns about the euro zone, and after the
European Central Bank left its benchmark interest rate
unchanged. 
    The currency showed no clear reaction after the ECB decision
with investors waiting for the press conference with central
bank president Mario Draghi.
    But the single currency rallied when Draghi gave no hints of
further easing in rates. The ECB had been expected to lower its
inflation and growth forecasts, giving Draghi room to cut rates
and support the recession-hit economy in coming months.
    Instead, Draghi said, "Inflation expectations for the euro
area remain firmly anchored, in line with our aim of maintaining
inflation rates below but close to 2 percent over the medium
term. Overall, this will allow our monetary policy stance to
remain accommodative."
    Draghi also said people have underestimated the political
commitment to the euro at their own cost..
    Draghi "has not signaled easing in the months ahead," said 
Omer Esiner, chief market analyst at Commonwealth Foreign
Exchange in Washington D.C. "That's why we are seeing the euro
rally." 
    The euro was up 1.1 percent on the day at $1.3109.
The session peak of $1.3116 marked a five day high. 
    Marc Principato, director of SMB Forex Trading And Education
in New York said after breaching minor resistance at $1.3050, 
the single currency faced more significant resistance between
1.3250 - 1.3300 in the coming week.  
    Most analysts say even if borrowing costs for highly
indebted euro zone countries like Spain and Italy do not rise,
on a more fundamental basis the struggling euro zone economy
will need a more accommodative monetary policy stance along with
a weaker currency to boost growth.
    Spain sold 5 billion euros of bonds, hitting the top end of
its targeted amount at reduced borrowing costs despite political
uncertainty in Italy. 
    "The Spanish auction shows there is still demand (for its
debt) which is positive and a little bit surprising considering
what is happening in Italy," said Richard Falkenhall, currency
strategist at SEB in London. 
                
    STERLING JUMPS
    Sterling rebounded from a 2-1/2 year low against the dollar
 and last traded at $1.5061, up 0.3 percent, after the
Bank of England decided not to resume its quantitative easing
programme. 
    Many investors had bet against the pound in recent weeks on
expectations that a grim UK economic outlook would prompt the
central bank to pump in more liquidity. The BoE's bank rate is
at a record low of 0.5 percent.
    Against the yen, the dollar was up 0.3 percent at 94.36
, moving closer to the peak reached in February, its
highest since May, 2010. 
    Earlier on Thursday, the Bank of Japan kept monetary policy
unchanged, but the yen weakened against the dollar on
expectations of aggressive easing in the future. Some
strategists have revised their forecasts to show sustained yen
weakness. 
    UBS changed its end-2013 forecast for the dollar to 100 yen
from 85 yen.

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