European Session – Euro tumbles on speculation of negative rates, all eyes on Draghi
February 12, 2014 2:53 pm
The main developments during the European session were weakness in the euro and strength in the British pound as a result of key fundamental news releases today.
The euro tumbled against the dollar as European Central Bank Executive Board member Benoit Coeure signaled the ECB may impose negative deposit rates.
In an interview with Reuters, the top ECB policy maker made the following comment in reference to interest rates:
“That is something we are considering very seriously. But you should not expect too much of it”.
The euro was trading steady against the dollar before Coeure’s comments and showed little reaction to Eurozone industrial production data, which showed a decline to 0.7%, more than the 0.2% that was expected. What acted as a catalyst to the euro’s decline was Coeure’s comments, resulting in a 0.5% loss against the dollar, for the euro to end the session at 1.3576. All eyes are now on EBC President Draghi’s speech in Brussels at 15:30am GMT.
There was a major development for sterling following the release of the Bank of England’s quarterly inflation report. UK yields and sterling rose after the BOE governor Mark Carney noted that the UK’s economic recovery was gaining momentum. Markets factored in a rate increase earlier in 2015, sooner than previously thought.
The pound gained 0.4% against the dollar to end the session at 1.6536, after hitting as high as 1.6557.
The dollar extended its decline against the yen to fall to a session low of 102.22 from the session open of 102.46. The risk appetite that followed China’s trade data release earlier today quickly faded and safe haven demand was back, helping the yen gain ground. The dollar ended the session with a 0.16% loss.
The main developments during the European session were weakness in the euro and strength in the British pound as a result of key fundamental news releases today.
The euro tumbled against the dollar as European Central Bank Executive Board member Benoit Coeure signaled the ECB may impose negative deposit rates.
In an interview with Reuters, the top ECB policy maker made the following comment in reference to interest rates:
“That is something we are considering very seriously. But you should not expect too much of it”.
The euro was trading steady against the dollar before Coeure’s comments and showed little reaction to Eurozone industrial production data, which showed a decline to 0.7%, more than the 0.2% that was expected. What acted as a catalyst to the euro’s decline was Coeure’s comments, resulting in a 0.5% loss against the dollar, for the euro to end the session at 1.3576. All eyes are now on EBC President Draghi’s speech in Brussels at 15:30am GMT.
There was a major development for sterling following the release of the Bank of England’s quarterly inflation report. UK yields and sterling rose after the BOE governor Mark Carney noted that the UK’s economic recovery was gaining momentum. Markets factored in a rate increase earlier in 2015, sooner than previously thought.
The pound gained 0.4% against the dollar to end the session at 1.6536, after hitting as high as 1.6557.
The dollar extended its decline against the yen to fall to a session low of 102.22 from the session open of 102.46. The risk appetite that followed China’s trade data release earlier today quickly faded and safe haven demand was back, helping the yen gain ground. The dollar ended the session with a 0.16% loss.
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