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 yen dropped to the lowest in a week versus the greenback as Bank of Japan Deputy Governor Kikuo Iwata said excessive gains in the currency are bad for the nation’s exports. Sweden’s krona appreciated versus all of its 16 major peers after retail sales unexpectedly rose in April.
“Given the low levels of inflation that Europe has, and the growth signals that they’re getting right now, there’s enough justification for negative interest rates,” said Shaun Osborne, chief currency strategist at Toronto-Dominion Bank, by phone from Toronto. “Beyond that I think what Draghi seems to be saying, is they need to see how things pan out, particularly on the inflation front, before they can reckon with any other measures.”
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