EURO EXPLODES TO TWO YEAR HIGH
.... Attention was on the EUR in the aftermath of Thursday's paradoxical Draghi press conference, which led to a "bipolar" market reaction, seen as dovish by rates while hawkish by FX.The euro's surge to an almost two-year high
Summarizing the market reaction, Yann Quelenn, a market strategist at Swissquote Bank said,
“Draghi tried to talk the Euro down, even going so far as to suggest that ECB’s quantitative easing could be increased and prolonged. But the currency markets were not buying Draghi’s line, and neither are we. Available bonds are too scarce, and turn to a taper is too clear to disguise."
As a result, bonds jumped even as the euro headed for its strongest level against the dollar in almost two years on bets the European Central Bank will start tapering its stimulus program despite Draghi's sounding particularly dovish, with the greenback already under pressure from U.S. political developments.
... the EUR surged to the highest since August of 2015, and is up 11% for 2017...
... while the US dollar dropped to the lowest since August amid growing political concerns after reports that U.S. special counsel Robert Mueller expanded his investigation of Trump less than a day after the president told the New York Times that any digging into his finances would cross a red line.
“Everything speaks in favor of further EUR appreciation --
- Increasing portfolio inflows,
- Changing monetary policy,
- Improved political risks,”
according to Peter Kinsella, a London-based senior foreign-exchange and rates strategist at Commonwealth Bank of Australia. “It’s an armor-plated rally and it won’t stop”
- USD: In currencies, the Bloomberg Dollar Index was down 0.1 percent, in line for a weekly loss of 0.8 percent, at 10:41 a.m. in London, as the greenback weakened against most of its G-10 peers.
- YEN: The yen was up 0.2 percent at 111.71 per dollar.
- EURO: The euro climbed 0.1 percent to $1.1642 after reaching a 23-month high earlier in the session. The common currency has gained 1.6 percent this week, its second straight five-day advance.