Euro US Dollar (EUR/USD) Exchange Rate Climbs Ahead of ECB Rate Decision

17 June, 2018, 11:43 | Author: Salvatore Jensen
  • ECB calls halt to quantitative easing, despite 'soft' euro

The ECB now plans to reduce monthly asset purchases between October and December to 15 billion euros until the end of 2018 and then conclude the programme, though ECB President Mario Draghi stressed that the governing council stood ready "to adjust all its instruments as appropriate".

The euro dropped on the outlook for interest rates, trading 1% lower shortly after the announcement.

"There is no urgency for China to maintain its favorable yield differential against the United States as capital outflow and currency stability is no longer the key concern for China at the moment", said Tommy Xie, economist at OCBC Bank.

The dollar slipped against its global peers Friday and global stocks fell as the U.S. slapped new tariffs on Chinese goods, reviving the markets fears of an escalating trade war, dealers said.

In the May statement, however, the USA central bank said that "economic activity has been rising at a moderate rate".

European markets were mixed, while stocks in Asia were mostly lower.

The Pound Euro (GBP/EUR) exchange rate skyrocketed on Thursday, as the single currency was met by a heavy sell-off in the wake of the European Central Bank's (ECB) latest policy meeting. Although it might seem like a positive development, markets' enthusiasm for the Euro sank when it appeared that interest rates would remain stagnant through the summer of next year.

"The main focal point is whether the euro will bottom out" against other major currencies following the European Central Bank decision, an official at a foreign exchange margin trading service firm said.

US President Donald Trump has made up his mind to impose "pretty significant" tariffs and will unveil a list targeting $50bn of Chinese goods on Friday, an administration official said.

A broader slowdown could make it harder for the ECB to cut support if lower growth eases pressure on inflation, a threat to the bank's credibility as it has missed its inflation target of nearly 2 percent for over five years. The S&P 500 added 0.3% and the Nasdaq gained 0.9%.

The Dow Jones industrial average closed 0.1% lower on Thursday.

Italy's new populist government is a coalition between the anti-establishment 5-Star Movement and the anti-immigration League.

Markets are on the lookout for clues from Bank of Japan governor Haruhiko Kuroda's post-meeting briefing at 6.30am GMT on how long the central bank could hold off on whittling down stimulus given stubbornly weak inflation.

The BOJ's inaction came after the U.S. Federal Reserve decided Wednesday to raise interest rates.

Oil markets, pressured by the strengthening dollar and fears that OPEC countries could decide to increase output at a meeting next week, ended mixed.

Brent crude, the worldwide standard, fell 13 cents to $75.81 per barrel.



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