Dailyfx: Euro Records Three-month High on Draghi’s Comments
DAILYFX – On Monday, the euro recorded more than a three-month high in battling against the greenback following European Central Bank Chief Mario Draghi’s comment on seeing a vigorous pickup in euro zone inflation.
During the last few weeks, the euro has been on an uptrend, strengthened by generally solid European economic data. The euro increased 2.5% against the dollar over the last 10 days.
Meanwhile, the greenback made some minimal changes against the yen. This is amid the investors’ search for new clues in extending a multi-month rally in the dollar before the implementation of the rate hike this week by the US Federal Reserve.
The dollar shortly declined against the yen following the reports of some media. The reports were about U.S. Deputy Attorney General Rod Rosenstein heading to the White House amid reports that he will resign in anticipating that he might be fired by US President Donald Trump.
Elsewhere, media reports stated that Rosenstein had not offered to step down. Rosenstein oversees the special counsel investigation regarding the role of Russia during the US presidential election in 2016.
Aside from Fed’s rate hike a few days away, markets were shaken by the hawkish comments of Draghi concerning the inflation and wage growth. Also, he already called and affirmed of ECB’s vow to maintain its rates at their current, rock-bottom level “through the summer” until 38.
According to Market Directors John Doyle at Tempus Consulting in Washington, Draghi’s comments signify that other central banks are attempting to catch up with the Fed in tightening monetary policy.
“The idea of divergence between the Fed tightening and other central banks either on hold or cutting rates is not there to support the dollar anymore,” Doyle said.
The euro climbed 0.2% against the dollar to $1.1771 during midday trading. Further, it increased to as high as $1.1815, a 3-1/2-month peak.
Dailyfx: Dollar increases vs. yen before Fed rate hike
On Tuesday, the dollar remained steady against its rivals as investors searched for fresh policy clues from the US Federal Reserve which is expected to hike rate this week.
The Fed will have its eighth-time hike on interest rates since late 2015.
“Despite U.S.-China trade tensions, the U.S. economy is okay. That is why the Fed can continue tightening,” said Chief Currency Strategist Masafumi Yamamoto of Mizuho Securities.
The dollar index went about 0.1% higher at 94.274. In a battle against the Japanese yen, the greenback made an increase of 0.1% to 112.91 yen. It shortly traded at 112.96 yen which was its highest level since reaching 113.16 yen on July 19.
