💎 Fed’s first rate cut since 2020 set to trigger market. Find undervalued gems with Fair ValueSee Undervalued Stocks

FOREX-Euro edges down before ECB, New Zealand dollar jumps

Published 22/10/2015, 07:27 pm
© Reuters.  FOREX-Euro edges down before ECB, New Zealand dollar jumps
AUD/USD
-
USD/CAD
-
NZD/USD
-
DBKGn
-

* Dollar/yen 1-month volatility falls to lowest since August

* Canadian dollar steadies after hit from poorer growth outlook

* New Zealand dollar bounces almost 1 percent

By Patrick Graham

LONDON, Oct 22 (Reuters) - The euro inched lower on Thursday ahead of a European Central Bank policy decision, with most major banks expecting President Mario Draghi to talk down the currency, up more than 8 percent since the ECB began its bond-buying programme in March.

Speculation on how far the bank could go towards signalling an extension or expansion of its quantitative easing has dominated currency trade this week, but there is now little conviction the meeting will spur a strong move in the euro.

"Can Draghi push the euro or euro yields much lower in today's ECB meeting? We think he will sound dovish, but will struggle to do so," Deutsche Bank (DE:DBKGn) strategist George Saravelos said in a morning note to clients.

Reuters polling puts the median probability of the ECB extending its 1 trillion euro programme beyond its current end date of September 2016 at 70 percent, according to a Reuters poll of economists. The same poll saw a 40 percent chance that the ECB would increase its monthly purchases over the next six months. urn:newsml:reuters.com:*:nL9N0WZ019

Saravelos argued that the extension of the programme is already largely priced in, as is 5 basis points worth of a further cut in the bank's deposit rate. He said Draghi was unlikely to deliver any of that on Thursday.

The euro dipped 0.2 percent to $1.1313 in early trade in Europe, and around 0.4 percent to 135.48 yen. EURJPY=

The bigger moves this week have been on the Canadian, Aussie and New Zealand dollars, buffeted by a raft of policy signals and political commentary.

The loonie CAD= has turned back towards 11-year lows since weekend elections and took another hit from a cut in Bank of Canada's growth forecasts on Wednesday. It steadied in European trade, up 0.1 percent on the day by 0750 GMT at C$1.3119 per U.S. dollar. CAD=

The kiwi gained as much as 1 percent, recovering from a poor milk auction earlier in the week and helped by comments attributed by media to Finance Minister Bill English that the currency had already adjusted "quite considerably".

"The positive view from Finance Minister English has supported the (New Zealand) dollar overnight, although the move happened slightly later," said Josh O'Byrne, a strategist with Citi in London.

"The (New Zealand) dollar should remain supported by a paring back of expectations on near-term RBNZ cuts." (Editing by Hugh Lawson)

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.