Euro takes breather below 3-year high; dollar gets respite
The euro’s pull-back from highs helped stabilize the greenback, which has come under pressure as central banks of other major economies begin to move toward tighter monetary policy amid a more synchronized global recovery.
The euro last stood at $1.2194, up 0.1 percent on the day but well below a peak of $1.2323 set on Wednesday, the euro’s strongest level since December 2014.
ECB policymakers may have been caught off guard by the speed of the euro’s appreciation, said Lee Jin Yang, macro research analyst for Aberdeen Standard Investments in Singapore.
“Maybe they are trying to manage volatility or slow down the rise,” Lee said.
The common currency had slipped on Wednesday as ECB policymaker Ewald Nowotny told reporters the euro’s recent strength against the dollar is “not helpful,” which encouraged a bout of profit-taking before a policy meeting next week.
In an interview with an Italian newspaper Vitor Constancio, the ECB vice president, said he did not rule out that monetary policy would still continue to be “very accommodating for a long time”.
There could be some profit-taking and consolidation in the euro ahead of the ECB’s policy meeting next week, although the currency’s outlook over 2018 looks positive, said Roy Teo, investment strategist for LGT Bank in Singapore.
“We see upside risk towards $1.30 by the end of this year… It’s surprising to note that growth in the euro zone is actually similar if not outpacing the U.S,” Teo said.
The greenback gained some respite against other major peers. Against the yen, the dollar rose 0.1 percent to 111.36 yen, having bounced from Wednesday’s four-month low of 110.19 yen.
The Canadian dollar eased about 0.1 percent to C$1.2450, having see-sawed on Wednesday after the Bank of Canada raised interest rates and indicated confidence in the economic outlook but sounded a cautious tone on the future of the North American Free Trade Agreement (NAFTA).
On Wednesday, the Canadian dollar had fluctuated in a relatively wide range of C$1.2540 to C$1.2362.
Later on Thursday, investors will turn their focus to China’s fourth-quarter and 2017 gross domestic product data, and data on December factory output, retail sales and fixed-asset investment.
The Chinese economic indicators are due to be released at 0700 GMT rather than the usual 0200 GMT.
Source: Reuters
