Major Currency Pairs Analysis: Euro Falls, Pound Declines
ICM Brokers | Jun 27, 2013 06:19AM ET
EUR/USD
The euro fell below $1.30 for the first time in almost a month as European Central Bank President Mario Draghi said monetary policy will remain simulative, dimming the relative allure of assets denominated in the currency. The euro weakness today is being driven by comments from Draghi,” said Eric Viloria, senior currency strategist for Gain Capital Group LLC in New York, in a telephone interview. “It’s all about market perception of which direction central banks are moving. The Fed is moving in a direction where they’re going to be slowing the pace of accommodation, while the ECB could still provide more, if necessary; the euro declined 0.5 percent to $1.3010.
GBP/USD
The pound declined after Bank of England policy maker David Miles said the economy remained weak and renewed his call for more asset purchases. U.K. government bonds rose for the first time in five days and the pound declined after Bank of England policy maker David Miles said the economy remained weak and renewed his call for more asset purchases. The Bank of England’s benchmark interest rate has been at a record-low 0.5 percent since March 2009 and the central bank has bought 375 billion pounds of government bonds since then.
USD/JPY
The yen is still working as a safe haven,” said Ulrich Leuchtmann, head of currency strategy at Commerzbank AG in Frankfurt. “The dollar is recovering against nearly everything and for the yen this has stopped. It’s certainly a China story. The impression I get is that many people in Europe don’t know what’s going on, and this is creating a risk-off mood, the yen tends to strengthen during periods of financial and economic turmoil because Japan isn’t reliant on foreign capital to fund its deficits. Its four day advance to 0.9 percent. Japan’s currency gained 0.3 percent to 97.50 per dollar. The yen has tumbled 7.1 percent this year, the biggest decline among 10 developed-market currencies.
USD/CAD
Canada’s dollar rose the first time in nine days as Federal Reserve Bank of Richmond President Jeffrey Lacker said he expects the U.S. expansion to remain “sluggish” for “a couple more years,” bolstering the case for sustained stimulus. Canada’s dollar rose earlier with those of fellow commodities producers Australia and New Zealand after the European Central Bank President Mario Draghi said the central bank “will stay accommodative for the foreseeable future” and Bank of England Governor Mervyn King said yesterday the slowing of asset purchases isn’t imminent. The Bank of Canada remains the only Group of Seven central bank with a bias to raise rates. The Canadian dollar rose 0.4 percent to C$1.0470 per U.S.
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