Dollar under pressure

The euro led a broad advance in currencies against the greenback Thursday after a string of central bankers hinted at an end to loose monetary policies that have been in place since the financial crisis.

The single currency powered to more than one-year highs Wednesday after European Central Bank boss Mario Draghi offered a more hawkish outlook for the eurozone than expected, with traders brushing off later attempts by his officials to play down his remarks.

In early Asian business the euro broke above $1.14 for the first time since June last year as markets bet the ECB, finally seeing a recovery in the eurozone economy after years of weakness, will soon begin winding down its stimulus.

The outlook from the ECB comes as several central bank bosses hint at tightening policies put in place to combat the hammering the global economy took from the financial crisis that started 10 years ago.

Sterling powered higher after Bank of England chief Mark Carney hinted at a rate hike, which took dealers by surprise and distracted them from British political uncertainty caused by this month’s general election.

– Sterling rally –

The pound headed towards $1.30 for the first time in a month.

“This abrupt policy change saw chaotic price action leaving a swath of carnage in its wake. The markets have been trading GBP from the short side given the recent election results, and all the negativity surrounding Brexit,” said Stephen Innes, senior trader at OANDA.

Similar comments from the head of Canada’s central bank provided a boost to the country’s dollar, while rising commodity prices and talk of an Australian rate lift supported the Aussie.

AFP

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Stephen Innes

Stephen Innes

Head of Trading APAC at OANDA
Stephen has over 25 years of experience in the financial markets and currently based in Singapore as the Head of Trading Asia Pacific with OANDA. Stephen's market views focus on the movement of G-10 and ASEAN Currencies. His views appear in Bloomberg, CNBC.Reuters, New York Times WSJ and the Economist. His media appearances include Bloomberg TV & Radio, BBC International, Sky TV, Channel News Asia, ASTRO AWANI and BFM Malaysia. Stephen has an extensive trading experience in Spot and Forward FX, Currency and Interest Rate Futures, Money Market Derivatives and Precious Metals. Before joining OANDA, he worked with organisations like Nat West, Chemical Bank, Garvin Guy Butler, and Sumitomo Mitsui Banking Corporation. Stephen was born in Glasgow, Scotland, and holds a Degree in Economics from the University of Western Ontario.
Stephen Innes
Stephen Innes

Latest posts by Stephen Innes (see all)