July 6, 2022
  • July 6, 2022

US dollar improves after ECB policy talks cool euro

By on April 22, 2021 0

NEW YORK (Reuters) – The US dollar appreciated against major currencies on Thursday, as positive economic news contrasted with comments from the European Central Bank that eurozone weakness still requires sustaining its pace current bond purchases.

FILE PHOTO: The inverted image of United States President George Washington is seen on an engraving plate for a US dollar bill at the Bureau of Engraving and Printing in Washington on November 14, 2014. REUTERS / Gary Cameron

This move was bolstered at the end of the day by a risk-free dollar offer when news broke that US President Joe Biden will almost propose doubling capital gains taxes for people earning over a million. of dollars.

The dollar index against major currencies rose 0.2% to 91,303 late afternoon in New York after markets sifted through ECB remarks and news that new demands Unemployment rates in the United States had fallen to a 13-month low, paving the way for successful job growth in April.

The euro had risen about 0.1% against the dollar before the events, but then fell 0.2% on the day to $ 1.201.

ECB Director Christine Lagarde said policymakers had not discussed phasing out the bond buying program “because it’s premature.” She said the economy is still “clouded by uncertainty” despite signs of improvement and progress in immunization.

Eurozone bond yields fell after Lagarde’s speech.

“Until you see better COVID numbers outside of Europe, the euro’s upside potential will be limited,” said Ronald Simpson, managing director, global currency analyst at Action Economics in Safety Harbor, Florida.

Simpson added that if Biden’s tax proposal goes ahead, it could hurt the greenback if it prompts stock investors to sell big gains before it goes into effect.

“This could keep the pressure on the stock market, on and off, for the rest of the year, which doesn’t bode well for the dollar if we start to see exits of US stocks,” Simpson said.

The immediate impact was “not too serious,” said Erik Bregar, head of foreign exchange strategy at the Exchange Bank of Canada.

“We are seeing an extension of the movement this morning after the ECB,” Bregar said. “This is a classic risk-free US dollar offer.”

Currency markets were initially hesitant about what Lagarde revealed about the timing of the interest rate hikes.

Alex Merk, chief investment officer at Merk Investments in Palo Alto, Calif., Said the market had heard that the ECB wanted to pace its rate movements with those of the US central bank, but also that the two economies had trajectories. different inflation rates.

At the end of the day, Merk said, “there wasn’t a great deal of stuff there.”

The currency turmoil on Thursday morning was another example of how the markets were concerned about how quickly individual economies will rebound from the pandemic and how their interest rates will fluctuate.

On Wednesday, the Canadian dollar rose sharply after the Bank of Canada announced rate hikes next year and said it was slowing asset purchases. The announcement marked the first Group of Seven central bank to move towards withdrawing the stimulus.

Now, markets are looking to next week’s meeting of the US Federal Reserve and possible comments on how it views future changes in its easy monetary policy.

Yields were little changed on the day at 1.55% despite rising around four basis points at one point.

Sentiment toward the dollar weakened much of this month after a March spike in Treasury yields reversed course. But some analysts say the long-term outlook remains positive due to a strong US economy and more coronavirus vaccinations.

Merk said, “At the end of the day what matters is the progress of the pandemic” and what that means for a global recovery, inflation and interest rates.

In the cryptocurrency markets, ethereum jumped 10% during the day. Bitcoin slipped around 2% to $ 52,800.

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Bid price for currencies at 3:31 p.m. (1931 GMT)

Description RIC Last US Close Pct Change YTD Pct High Bid Low Bid

Previous change

Session

Dollar index

91.3030 91.1100 + 0.22% 1.469% +91.4250 +90.9980

Euro dollar

$ 1.2010 $ 1.2036 -0.20% -1.69% + $ 1.2070 + $ 1.1994

Dollar / Yen

108.0350 108.0400 + 0.00% + 4.56% + 108.2300 + 107.8150

Euro / Yen

129.74 130.03 -0.22% + 2.22% +130.4600 +129.6800

Dollar / Switzerland

0.9178 0.9172 + 0.08% + 3.75% + 0.9191 + 0.9145

Sterling / Dollar

$ 1.3839 $ 1.3927 -0.64% + 1.29% + $ 1.3948 + $ 1.3825

Canadian dollar

1.2501 1.2495 + 0.06% -1.81% +1.2534 +1.2473

Aussie / Dollar

$ 0.7707 $ 0.7753 -0.62% + 0.16% + $ 0.7764 + $ 0.7692

Euro / Switzerland

1.1021 1.1033 -0.11% + 1.98% +1.1047 +1.1015

Euro / pound sterling

0.8677 0.8641 + 0.42% -2.91% +0.8702 +0.8635

NZ

Dollar / Dollar $ 0.7160 $ ​​0.7209 -0.69% -0.31% + $ 0.7213 + $ 0.7148

Dollar / Norway

8.3720 8.3410 + 0.51% -2.37% + 8.3910 + 8.3130

Euro / Norway

10.0577 10.0368 + 0.21% -3.91% +10.0729 +10.0127

Dollar / Sweden

8.4326 8.4015 + 0.10% + 2.88% + 8.4506 +8.3861

Euro / Sweden

10.1283 10.1180 + 0.10% + 0.52% +10.1387 +10.1040

Reporting by David Henry in New York and Ritvik Carvalho in London; additional reporting by Stanley White in Tokyo; edited by Larry King, William Maclean and Andrew Heavens