Daily market report Pound Weakens Most in a Month Versus Euro on ECB - Dollar-Yen Set for Weekly Gain as Dudley Backs Taper Before Jobs - ECB Policy Unchanged The pound weakened the most in more than a month against the euro as European Central Bank President Mario Draghi raised forecasts for euro-area growth this year, boosting the relative allure of the shared currency. The pound slid 0.7 percent to 82.73 pence per euro at 4:32 p.m. London time, the biggest decline since Feb. 3. The currency was little changed at $1.6738 after climbing to $1.6823 on Feb. 17, the strongest since November 2009. The Bank of England’s decision to maintain the official bank rate at 0.5 percent was expected by all 52 economists in a separate Bloomberg survey. Analysts also forecast no change in the bank’s asset purchase plan. The central bank said in a statement today it plans to reinvest 8.1 billion pounds “evenly across the three gilt-maturity sectors,” of three-to-seven years, seven-to-15 years and more-than-15 years in operations starting next week. The BOE said in its quarterly Inflation Report last month it intends to maintain the stock of purchased assets at least until the first increase in its benchmark rate. The dollar was set for its biggest weekly gain in three months versus the yen before the release of U.S. payrolls data, with Federal Reserve officials reiterating the threshold for changing its stimulus tapering is high. The U.S. currency yesterday touched its strongest versus the yen since January as reports showed fewer Americans filed claims for jobless benefits. The euro headed for a fifth weekly gain as European Central Bank President Mario Draghi damped speculation of further monetary easing. Australia’s dollar held near its highest in almost three months as central bank Governor Glenn Stevens said he doesn’t see a need to cut interest rates. The dollar was little changed at 102.96 yen as of 6:45 a.m. in London, from 103.07 yen yesterday, and has climbed 1.1 percent this week, the biggest advance since the period ended Nov. 29. It traded at $1.3862 per euro from $1.3861, set for a 0.4 percent decline since Feb. 28. The shared currency fetched 142.73 yen from 142.86 and was headed for a 1.6 percent weekly gain, the biggest since the five days to Dec. 27. The U.S. probably added 149,000 jobs in February, after a 113,000 increase a month earlier, according to the median estimate in a Bloomberg News survey of economists taken before the Labor Department report today. Payroll gains averaged almost 200,000 a month in 2013. Fed policy makers are trying to determine whether recent economic weakness stems from harsh weather or fundamental obstacles to growth. At a March 18-19 meeting of the Federal Open Market Committee they’ll weigh whether to proceed with another $10 billion cut to their bond purchases, which would reduce the monthly pace to $55 billion. The ECB left its benchmark interest rate at 0.25 percent at a meeting in Frankfurt yesterday as forecast by 40 out of 54 economists surveyed by Bloomberg News. The other 14 were predicting a rate cut. Euro-area inflation, which was at 0.8 percent in February, will accelerate to 1.7 percent in the fourth quarter of 2016, according to ECB forecasts. Consumer prices are projected to rise 1 percent this year. ECB officials see inflation at 1.3 percent in 2015 and an average rate of 1.5 percent in 2016. “Expectations for further easing have been pushed back, creating pressure on the euro to rise toward $1.40,” said Minori Uchida, the Tokyo-based head of global-market research at Bank of Tokyo-Mitsubishi UFJ Ltd., a unit of Japan’s biggest financial group by market value. “But as the euro rises, it’ll increase disinflationary pressure, eventually necessitating more stimulus.” Have a good day!
Posted on: Fri, 07 Mar 2014 09:37:43 +0000
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