Euro Surges the Most in Three Months as Market Faults ECB Measures

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Euro Surges the Most in Three Months as Market Faults ECB MeasuresThe euro rose by the fastest pace in one session in three months versus the dollar last week over indicators that European Central Bank’s measures would cause depreciation in the exchange rate.

The euro declined 0.5 percent against the U.S. currency on June 5, the biggest gain since March, before closing at $1.3643 in New York on Friday. The yen tumbled 0.7 percent over the week to 102.48 per dollar, its weakest performance since the weekly session ended April 18. The yen also fell 0.8 percent to 139.80 per euro.

The U.S. dollar advanced against a pool of major counterparts after a U.S. employment data matched economists’ forecasts, strengthening bets that the Federal Reserve will continue tapering its monthly asset-purchase program. The Bloomberg Dollar Spot Index, which measures the dollar against a pool of 10 major peers, rose 0.2 percent to 1,012.80.

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“The ECB is going to have to do more to convince the market that they should be selling euros,” Steven Englander, the global head of Group of 10 foreign-exchange strategy at Citigroup in New York told Bloomberg. “And in some ways it looks almost as if they don’t care.”

Most traders bet that the euro will decline versus the dollar to a record low since July. The Commodity Futures Trading Commission data indicated that net shorts, or bets that euro will fall, totalled 33,025 on Tuesday, up from 16,633 a week earlier.

Last week, the ECB lowered the deposit rate to -0.1 percent in a bid to stimulate consumer spending. Separate data showed that U.S. nonfarm payrolls rose by 217,000 last month, though this was less than 282,000 new jobs created in April. The jobless rate stood at 6.3 percent, indicating that the economy is on a steady recovery after the winter-induced lull in the first quarter. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.

To contact the reporter of this story; Jonathan Millet at john@forexminute.com