Here’s why the rising euro is defying mario draghi and the ecb – marketwatch how does the commodity futures market work

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The euro moved back above the $1.20 barrier against the U.S. dollar on Thursday, defying warnings from European Central Bank President Mario Draghi that the currency’s strength might have negative consequences for the continent’s economy, as euro bulls proved that its takes more to spook them.

As Draghi was speaking at a news conference following the ECB’s decision to leave its interest rates unchanged earlier today, the eurozone currency

spiked to an intraday high of $1.2059 before retreating to $1.2005 later in the session european stock market futures. The euro also gained against other rivals such as the British pound

While the euro has appreciated 14% against the greenback this year, it only broke through the $1.20 in late August, stirring concerns among market participants about verbal intervention from Europe’s central bankers.


But while Draghi touched on the euro’s strength and its potential negative impact on exports, as well as inflation, he refrained from making specific comments such as on a maximum level the central bank was willing to endure, leaving those for hoping for more aggressive rhetoric at a loss.

The ECB emphasized “that the exchange rate presents ‘a source of uncertainty…for the medium-term outlook for price stability’ silver chart 5 year. By ECB standards, that counts as a significant verbal intervention into foreign exchange markets,” said Holger Schmieding, chief economist at Berenberg, in a note.

The strength of currencies is relative, so no matter how much Mario Draghi wishes the euro was lower, he will need the euro’s counterparts to strengthen in lockstep love quotes for boyfriend. Most important, the U.S. dollar has been dealing with its own set of problems, including mixed economic data, geopolitical turmoil, domestic policy uncertainty, and suspicions the Trump administration itself would prefer a weaker dollar.

Case in point, Thursday’s initial jobless claims came in higher than expected at 298,000, guiding the greenback lower fraction operations. Meanwhile on Wednesday, Federal Reserve vice chair Stanley Fisher announced his resignation from the central bank due to personal reasons cnn pre stock market futures. In response, market participants slashed their expectations for a rate increase until year-end and counted Janet Yellen out for a reappointment as Fed chair.

Along with this, the U.S. is dealing with the fallout from Hurricane Harvey and the preparation for Hurricane Irma, with the latter potentially being even more destructive.

“As for the relatively sharp jump in the euro from the start of the press conference, this probably owed as much to the […] higher than expected U.S. initial jobless claims, which not only highlighted a very poor forecast, but also the inability of algos to differentiate trend changes from Hurricane Harvey related distortions,” said Marc Ostwald, FX, rates and emerging markets strategist at ADM Investor Services International.

On Wednesday, President Donald Trump and congressional leaders agreed a deal to extend the deadline to raise the debt ceiling to December from this month, but investors shouldn’t necessarily take this as a sign that the gridlock in Washington, D.C. is loosening, Ostwald said.

“Politics continue to plague the dollar and the pound market data live futures quotes. Euro area political risks have not even vaguely materialized,” Ostwald said, adding that the Swiss National Bank will be behind its G-10 companions in terms of rate increases, weighing on the Swiss franc euro usd fx. The euro’s rise means many traders will also have been forced to unwind long-term bets the euro would fall, driving it higher, he said.

“Another failure to end the day above $1.20, despite having traded significantly above there on two occasions, would strongly suggest the psychological resistance is in play,” according to Craig Erlam, senior market analyst at Oanda. “Draghi may have failed to convince traders that the ECB is in fact dovish but he may have stumbled upon a natural barrier to the upside in the process, at least for now.”


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