|
 Austrian central bank chief Ewald Nowotny has been a bellwether in
the past for shifts in ECB policy and has previously been seen as
part of the German-led group on the ECB's governing council opposing
such outright money-printing.
His comments helped push the euro back by around a third of a
percent in morning trade against a dollar still feeling the positive
effects of Friday's surprisingly good U.S. jobs numbers.
"Nowotny's comments have just reinforced the market's view that the
ECB is inching towards outright quantitative easing, we think
probably in January, and that is continuing to hurt the euro," said
Lee Hardman, a strategist with Bank of Tokyo-Mitsubishi UFJ in
London.
Sterling and the New Zealand and Australian dollars had been the
main losers among major currencies early in Europe, both the Aussie
and the kiwi hurt by trade numbers from China showing a sharp drop
in imports and another 2 percent slide in oil prices.
Sterling and the Aussie recovered most of those losses, but the kiwi
traded almost 0.9 percent lower by 0630 ET while Norway's crown -
exceptionally sensitive to oil prices - dropped around half a
percent against both the euro and dollar.
"With the kiwi, its more the move higher in U.S. yields than
anything," said Hardman. "It's really a big story of dollar
strength."
The Swiss franc, another very low yielding currency, fell to an
18-month low of 0.9818 francs per dollar.
TARGETED
Among big events for markets this week are the European Central
Bank's second offer of targeted loans (TLTRO) to banks and speeches
by a handful of U.S. Federal Reserve policymakers ahead of next
week's final policy meeting of the year.
"The jobs numbers supported the dollar and we expect this trend to
continue ahead of the Fed meeting as interest rate expectations
continue to adjust," said Josh O'Byrne, a strategist with Citi in
London.
[to top of second column] |
Overall, the dollar was up another 0.1 percent against a basket of
currencies. Dealers said the yen was supported by around $2 billion
worth of options expiries at 121.50 yen per dollar, putting a cap on
the dollar's strength.
Most major banks continue to predict further gains for the dollar
against its major peers in 2015, although the surge past 120 yen has
left some wondering how much juice there still is in the yen trade,
at least for now.
There is also Japan's national election next Sunday, currently seen
as likely to give a boost to Prime Minister Shinzo Abe and
reflationary policies which weaken the yen.
The euro fell to a low of $1.2247 after Nowotny's comments.
"We expect the euro to continue to weaken in the week ahead,"
analysts from French bank BNP Paribas said in a note to clients.
"Another low TLTRO uptake could put some upside pressure on euro
front-end rates. However, low demand would also increase the chances
of an increase in asset purchases (by the ECB) early next year."
(Editing by Andrew Heavens)
[© 2014 Thomson Reuters. All rights
reserved.] Copyright 2014 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.
 |
