Cyprus Mail
Banking and Finance Business

Euro gains as ECB shows no focus on strong currency

Money Euro Circuit Drawing Image In Business And Finance Category At Pixy.org
Free image/jpeg, Resolution: 3417x2439, File size: 2.68Mb, money euro circuit drawing

At a press conference on Thursday, ECB President Christine Lagarde said the bank is not targeting exchange rates. She also struck a less dovish tone on the euro zone economy, as the ECB lifted its growth forecast for 2020.

After Lagarde’s briefing, sources said policymakers had agreed to look through the euro’s rise, judging it was broadly in line with economic fundamentals.

On Friday, however, ECB policymakers, including chief economist Philip Lane, warned against complacency over low inflation and highlighted risks from a strong euro, nuancing the bank’s benign message from a day earlier.

Since around mid-June, the euro has risen more than 6 per cent versus the dollar.

“There is a feeling here that it’s okay for the euro to be around $1.1750-$1.1850. If it hits $1.1950, it probably starts swinging down,” said Juan Perez, currency trader at Tempus Inc in Washington.

“Overall, ECB policymakers seem to be saying that let’s not overreact about the euro exchange rate,” he added.

In afternoon trading, the euro rose 0.2 per cent to $1.1831 EUR=EBS, but posted a second straight week of losses. It did reach a one-week high of $1.1917 on Thursday.

The dollar index, which tracks the greenback against other major currencies, was flat to slightly lower at 93.320. The index though showed a second week of gains.

The dollar was little changed against the yen at 106.10 yen.

Friday’s data showing a rise in U.S. consumer prices last month had little impact on the dollar. U.S. consumer price index rose 0.4 per cent last month, after gains of 0.6 per cent in June and July.

Overall, some analysts believe the dollar has scope for further gains as a safe haven amid still heightened uncertainty related to the COVID vaccine and the global recovery from the virus-induced downturn.

“We are concerned that the consensus may be too optimistic on the global economy; too optimistic on a vaccine; too pessimistic on the COVID-19 situation in the U.S. compared with that in Europe; and complacent on the U.S. elections,” said BofA Securities in a research note.

Elsewhere, the pound slipped 0.1 per cent against the dollar to $1.2794, and sank to a fresh 5-1/2-month low of 92.90 pence versus the euro, adding more losses after the heaviest sell-offs seen this year sent the pound falling nearly  per cent against the euro on Thursday.

As the Brexit saga intensifies, sterling posted its worst weekly performance versus the dollar since mid-March when forex markets were going through a coronavirus-induced turmoil.

Related posts

Lawmakers probe timeline of NatWest money laundering investigation

Reuters News Service

EU court backs Lufthansa, easyJet deals over Air Berlin assets

Reuters News Service

Bitcoin sits below all-time high after US ETF debut

Reuters News Service

New name for Facebook as it sets sights on metaverse

Reuters News Service

Fail whilst trying to change the world

CM Guest Columnist

‘Squid Game’ frenzy helps Netflix top subscriber targets

Reuters News Service