BS: Euro at Almost Two-Month High Versus Dollar on ECB
The euro fluctuated versus the dollar and the yen amid speculation European Central Bank President Mario Draghi will announce measures as soon as this week to ease the region’s debt crisis.
The 17-nation currency traded at almost the strongest in two months versus the dollar before erasing gains as global stocks declined. A member of the European Parliament said yesterday Draghi told lawmakers he’d be comfortable purchasing debt with maturities as longs as about three years. Australia’s dollar climbed from a six-week low against the greenback after the Reserve Bank of Australia refrained from cutting the developed world’s highest benchmark rate.
“There is still hesitance in the market about how much the ECB can actually announce, which is why the euro is fighting these rallies,” said Vassili Serebriakov, a currency strategist at Wells Fargo & Co. in New York. “The example of the Draghi story, or leak from a closed meeting with EU lawmakers, shows there is still scope for rumors, so the market is trying to position ahead of Thursday.”
The euro fell 0.2 percent to $1.2573 at 9:24 a.m. New York time, after climbing to $1.2638 on Aug. 31, the strongest since July 2. The shared currency was little changed at 98.55 yen, after appreciating to 99.03 yen on Aug. 31, the strongest since Aug. 21. The yen fell 0.1 percent to 78.37 per dollar.
Risk Markets
The Stoxx Europe 600 Index of shares fell 0.6 percent while futures on the Standard & Poor’s 500 Index (SXXP) declined 0.1 percent.
The euro has dropped 4.1 percent this year, the worst performance among 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The yen declined 3.1 percent, and the dollar weakened 1 percent.
Purchasing short-maturity bonds doesn’t constitute state financing, Draghi said at a closed-door parliamentary session in Brussels, Jean-Paul Gauzes a member of the European Parliament from the European People’s Party, told reporters. Gauzes, released a statement later saying Draghi hadn’t set out any future ECB operation. The ECB announces its next policy decision on Sept. 6.
There are growing “expectations for some kind of ECB bond- buying intervention,” said Eimear Daly, a currency analyst at Monex Europe in London. “Everyone is completely fixated on the bond-buying plan.”
Outlook Spread
Traders and strategists are more divided than at any time since 2011 over whether officials will be able to keep the currency from tumbling, according to data compiled by Bloomberg.
At about $1.26, the euro is 3.3 percent above the $1.22 median year-end estimate of more than 50 analysts, after the gap expanded to 3.8 percent last week. The last time the euro exceeded the consensus by that much was in July 2011, and it tumbled 9.4 percent in the next 10 weeks.
Australia’s currency rose 0.1 percent to $1.0252 after the central bank kept its overnight cash-rate target at 3.5 percent. It earlier fell to $1.0224, the weakest level since July 25. The Aussie appreciated 0.3 percent to 80.38 yen after sliding 0.9 percent yesterday.
The nation’s economy expanded 0.7 percent in the second quarter from the previous three months for the strongest first half of growth since 2007, a Bloomberg News survey showed before a government report tomorrow.
“The RBA is waiting and is on pause for now, which could be one of the reasons why market players are buying back the Aussie a bit,” said Lee Wai Tuck, a currency strategist at Forecast Pte in Singapore.
New Zealand’s dollar tumbled against the greenback even as the nation posted its first gain in commodity export prices since January. The so-called kiwi fell 0.5 percent to 79.36 U.S. cents and decline 0.3 percent to 62.23 yen.
Norway’s krone was the best performer against the dollar as crude oil rallied to its highest level in more than a week in New York. Crude oil for October delivery rose 0.2 percent to $96.66 a barrel in New York.
To contact the reporters on this story: Allison Bennett in New York at abennett23@bloomberg.net; David Goodman in London at dgoodman28@bloomberg.net
To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net
