The euro gained against the dollar Wednesday, erasing an earlier decline after European Central Bank President Mario Draghi confirmed that the eurozone’s recovery is on track and said the central back is ready to do more to lift the European economy if necessary.
The shared currency also climbed as yields on European government bonds jumped after the ECB lifted its inflation forecast for 2015 to 0.5%, up from 0% in its March predictions.
The euro EURUSD, +1.0313% was up 0.9% to $1.1257, breaking above the $1.12 level and adding to its weekly gain after scoring its biggest jump in more than two months on Tuesday.
The shared currency got a fillip from ECB President Mario Draghi, who said there is no need to expand the bank’s easing program, according to Neil Mellor, senior currency strategist at BNY Mellon. Overall, the ECB boss struck an upbeat tone on the eurozone’s economic recovery.
Check out MarketWatch’s ECB live blog recap: Mario Draghi in the hot seat
Investors on Wednesday also are digesting debt talks with Greece that are dragging on and nearing a deadline. Read more: Greece’s looming debt repayments in a pair of charts
Meanwhile, the dollar advanced against the pound following a weaker-than-expected reading on the U.K. services sector. Sterling GBPUSD, -0.0847% was last at $1.5334, down about 0.1% from $1.5343 late Tuesday in New York. The pound had dropped as low as $1.5251 intraday Wednesday, according FactSet data.
“Now the worsening economic climate suggests that the [Bank of England] is likely to remain stationary at least until 2016 which is likely to temper any upside moves in the pair,” said Boris Schlossberg, managing director of foreign-exchange strategy at BK Asset Management, in a note Wednesday. “Any further dollar strength could push it to a retest of the 1.5000 level as the week proceeds.”
The Markit/CIPS services purchasing managers index for May dropped to a five-month low of 56.5. The reading was below expectations and a three-point fall from April’s level, marking the steepest decline since August 2011.
The ICE U.S. Dollar Index DXY, -0.55% a measure of the dollar’s strength against a basket of six rival currencies, was down 0.5% to 95.3610.
