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

FOREX-Euro falls back after ECB's Nowotny threatens

Published 15/10/2015, 07:42 pm
© Reuters.  FOREX-Euro falls back after ECB's Nowotny threatens
EUR/USD
-
AUD/USD
-
NZD/USD
-
CBKG
-
BNPP
-
DX
-
DXY
-

* Euro retreats as ECB's Nowotny says need to act "obvious"

* Weak U.S. data keeps pressure on dollar

* Aussie, kiwi dollars big gainers again

By Patrick Graham

LONDON, Oct 15 (Reuters) - The dollar repelled an attack by the euro on $1.15 on Thursday, helped when European Central Bank policymaker Ewald Nowotny said that it was now "obvious" the bank must do more to stimulate the euro zone economy.

The dollar has fallen against the basket of currencies used to measure its broader strength in five of the past six weeks and it fell sharply against the yen and Australian and New Zealand dollars in early trade in Europe.

But three straight weeks of gains for the euro in that time have left the single currency more exposed to some retracement and profit-taking by those who have made money along the way.

Nowotny's comments underlined the big policy risk to the euro, namely that a slowdown in global growth would provoke the ECB into pumping yet more euros into the market than it has already promised.

"Our positioning analysis this week showed the market is quite long euro-dollar and that makes the euro very susceptible to any of this kind of talk," said Michael Sneyd, a strategist with French bank BNP Paribas (PA:BNPP) in London.

"Its also quite compelling if you look at the charts that $1.15 is seen as a ceiling. There's a lot of people in the market who will want to fade any euro strength up here and Nowotny's comments provide a good opportunity."

By 0810 GMT, the euro was down a third of a percent on the day at $1.1438 EUR= , having risen as high as $1.1495, its strongest since Aug. 26.

While the euro move gave the dollar some respite, in broader terms, it was still wallowing around seven-week lows against a basket of currencies, after a soft batch of U.S. data that prompted investors to push back bets for a first rise in U.S. interest rates far into next year.

The dollar index .DXY was last trading 0.1 percent stronger at 93.845. But the yen was around half a percent stronger, reaching an eight-week high of 118.10 in early European trade.

The New Zealand dollar gained as much as 1.5 percent to a 3-1/2 month high of $0.6897.

"Generally the theme is still dollar weakness across the board, because the market is pricing out a rate hike this year," said Thu Lan Nguyen, a currency analyst with Commerzbank (DE:CBKG) in Frankfurt.

"I don't see anything that will change that in the next couple of weeks."

Traders in Asia said the yen's gains had been held in check there by speculation that the Bank of Japan might take further stimulus steps to bolster the flagging economic recovery.

Japanese manufacturers' confidence worsened for the second straight month and is expected to fade further, a Reuters poll showed, adding to lingering fears of a recession and keeping pressure on policymakers to offer support. urn:newsml:reuters.com:*:nT9N11A01F (Editing by Tom Heneghan)

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.