Major Currency Pairs: Euro Fell To 3-Month Low Versus Dollar
ICM Brokers | May 27, 2014 03:44AM ET
EUR/USD
Trying to rebound over, the euro reached a three-month low against the dollar as European Central Bank President Mario Draghi signaled policy makers are ready to take action in June should they see low inflation becoming entrenched. The 18-nation currency fell below its 200-day moving average for a second day after protest parties racked up gains across the 28-nation European Union in elections to the bloc’s Parliament. The euro rose to 1.3646 as after falling to 1.3615, the weakest since February 13 and below its 200-day moving average of 1.3639. The euro has declined since touching a 2 1/2-year high of 1.3993 on May 8, when Draghi said he was comfortable with adding stimulus as soon as next month, denting demand for the currency. He yesterday said the key issue for the ECB right now is the timing of any action. The ECB next meets on June 5.
GBP/USD
The pound edged up against the U.S. dollar yesterday, as comments by Bank of England Deputy Governor Charles Bean continued to support demand for sterling, although Friday's upbeat U.S. data also lent support to the greenback. Sterling hit 1.6853 during yesterday’s evening trade, the session high; the pair subsequently consolidated at 1.6843, adding 0.09%. Demand for sterling continued to be underpinned after BoE Deputy Governor Charles Bean said Saturday that U.K. interest rates could start rising before next spring. The pound also remained supported after last week's minutes of the BoE’s May meeting indicated that some policymakers believe the decision on when to raise rates is "becoming more balanced," indicating that they are becoming more hawkish about the argument for hiking interest rates. Cable was traded at 1.6869 this morning rising from 1.6837, the lowest rate during the morning session.
USD/JPY
Japan’s risk of spurring inflation without boosting the nation’s growth potential is raising the stakes for Prime Minister Shinzo Abe’s next round of economic restructuring measures, due in June. Investors are looking for lower corporate taxes, labor-market flexibility and progress on a U.S.-led trade pact as Abe prepares for the next phase of the so-called “Third Arrow” of Abenomics, economic restructuring to boost long-term growth prospects. Iwata’s comments yesterday built on Governor Haruhiko Kuroda’s calls for the government and companies to do more to boost the nation’s outlook. The samurai currency was traded at 101.91 from 101.94 yesterday, to be traded at 101.88 during the Asian session rising from 101.98.
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USD/CAD
Consumer confidence is slumping as voters face an election that has focused on the finances of Canada’s biggest province. The Nanos Confidence Index measured 58.8 in Ontario in the week ended May 23, down from 59.5 the week before. Nationally, confidence was little changed at 59.6 last week, with sentiment improving in every region except Ontario. The party that wins the election will face the largest deficit of the nation’s 13 provinces and territories relative to the size of their economies. The province’s manufacturing sector, once one of Canada’s economic engines, was hit hard by the global recession. Since September 2008, Ontario manufacturers have eliminated 123,500 jobs, more than half the 234,000 factory jobs lost nationally, according to Statistics Canada data. Canadian dollar gains for the sixth day to be traded at 1.0840 today, the strongest level in a week. it started the morning session at 1.0857, almost as same as yesterday’s strongest rate.
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