Published Jun 14, 2018 01:45PM ET
Updated Jun 14, 2018 03:41PM ET
Dollar Bulls Get Fresh Ammo From Draghi-Powell Double Whammy
(Bloomberg) -- Currency traders looking to Jerome Powell and Mario Draghi for direction are getting the clearest signals yet that the dollar is set to extend its gains versus the euro.
That bet is being fueled by a divergence between the Federal Reserve chairman’s hawkish stance Wednesday and the European Central Bank president’s dovish posture Thursday. The disparate policy paths and contrasting fundamental trends in the U.S. and Europe are setting up a test of the key $1.15 level for the euro-dollar exchange rate in the weeks ahead, according to strategists at Charles Schwab (NYSE:SCHW) & Co. and ABN Amro Group NV.
The greenback has “a little room to run” still, said Kathy Jones, New York-based chief fixed-income strategist at Charles Schwab. “We have seen softer numbers out of Europe and firmer numbers out of the U.S.”
The Bloomberg Dollar Spot Index rose as much as 0.7 percent Thursday to its highest since November after the ECB pledged to keep interest rates unchanged at current record lows at least through the summer of 2019, even as it phases out bond purchases by the end of the year. The move comes a day after the Fed raised interest rates, ratcheted up rate projections for 2018 and 2019 and sounded an optimistic note on the U.S. economy. The greenback has risen 2 percent this year, rebounding after an almost 9 percent loss in 2017.
Here’s what others had to say about the euro-dollar outlook:
Written By: Bloomberg
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