The euro appears set to decline this week mostly due to comments by European Central Bank President Mario Draghi who said on Thursday that the bank may boost stimulus in order to tame the stronger euro.
The euro plunged almost 0.1 percent to $1.3836 at the morning trade in London, bringing its losses this week to 0.2 percent. The 18-nation currency fell to $1.3823, the lowest since May 2. The euro remained slightly unchanged at 140.72 yen, while the yen held at 101.70 a dollar, after surging 0.5 percent this week.
The euro’s decline was also fuelled by strategies in banks such as JPMorgan Chase & Co, UBS, Nordea Bank, Royal Bank of Scotland and Goldman Sachs Group Inc who altered their predictions to forecast the ECB may slash interest rates this June. A fall in U.S. Treasury 10-year yields to 2.57 percent reduced the demand by Japanese investors for the greenback.
“Draghi seems to have succeeded in raising market expectations for additional easing, weakening the euro,” Ken Takahashi, a New York-based assistant vice president for global markets at Sumitomo Mitsui Trust Bank Ltd told Bloomberg. “I expect the euro to stay soft until the June meeting.”
The euro has advanced 5.3 percent in the past year, making it the third-best performing currency out of the 10 major-economy currencies monitored by Bloomberg Correlation-Weighted Indexes. The yen has declined 2.5 percent, while the U.S. dollar has plunged 1.3 percent.
The Australian dollar plunged against most of its 16 major counterparts following a statement by the Reserve Bank of Australia that it will retain its benchmark interest rate for an undetermined period. The Aussie fell 0.1 percent to 93.64 U.S. cents after earlier surging to 93.94 cents on Thursday, a three-week high. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.
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