Schedule euro to dollar at intervals of 5 minutes
Major currencies fluctuated between moderate gains and losses on Thursday as markets tried to digest comments from the European Central Bank on interest rate policy amid new evidence in the United States of a stronger economic recovery.
The euro rallied higher, flirted with highs, and then fell after the European Central Bank maintained its interest rate policy and left open questions about how it will drop stimulus when the economy recovers.
The euro rose about 0.1% against the US dollar early in the day when the central bank released its announcement, and briefly gained when ECB chief Christine Lagarde subsequently cited “signs of improvement” amid clouds of economic uncertainty before falling.
In the middle of the morning in New York, the euro fell by 0.24% to $ 1.2007, and the dollar index against major currencies rose by 0.28% to 91.355.
Axel Merck, chief investment officer of Merk Investments in Palo Alto, Calif., Said markets were confused about Lagarde talking about the timing of the interest rate hike when she said the ECB would like to align with the U.S. central bank. but that the two economies have different inflation paths.
In the end, Merck said that “there was nothing special there.”
Thursday’s currency change was another example of how markets were preoccupied with figuring out how quickly different economies would recover from the pandemic and how their interest rates would fluctuate.
The Canadian dollar rose sharply on Wednesday after the Bank of Canada announced a rate hike next year and said it would abandon asset purchases. This announcement made it the first G7 central bank to begin ditching incentives.
Markets now await a meeting of the US Federal Reserve next week and possible comment on how it sees future changes in its loose monetary policy.
Following the ECB’s comments, eurozone bond yields rose while the 10-year US Treasury yield remained largely unchanged at 1.56%, despite government announcements that weekly US jobless claims continued to decline, strengthening expectations of a sharp rise in the number of US jobs in April.
Sentiment against the dollar eased this month after a March surge in Treasury yields reversed course. But some analysts say the long-term outlook remains positive due to the strong US economy and more coronavirus vaccinations.
“Looking ahead, we see a strategically high risk that real rates in the US will bounce back,” said Lars Sparrese Merklin, senior analyst at Danske Bank.
Merklin said: “Progress against the pandemic matters in the end,” and what that means for the global economic recovery, inflation and interest rates.
In markets, cryptocurrencies Ethernet jumped 10% and bitcoins jumped 3% to $ 55,400 at 12:35 GMT.
The euro fell after the European Central Bank did not give any hints of an exit from ultra-libertarian monetary policy, and strong macro data came out again in the US.
On Thursday, the European Central Bank decided to keep its policy unchanged as market participants seek clues as to when its massive monetary stimulus could begin to wind down.
“Maintaining favorable funding conditions during the pandemic remains important to reduce uncertainty and build confidence, thereby supporting economic activity and ensuring medium-term price stability,” ECB President Lagarde said at a press conference on Thursday.
The central bank said last month that it intends to increase purchases of government bonds – albeit still within the planned € 1.85 trillion ($ 2.2 trillion) package through March 2022 – to address rising bond yields in the euro area. At the time, the ECB expressed concern about a sharp rise in borrowing costs for eurozone governments before the economy fully recovers from the shock caused by the coronavirus.
As a result, Deutsche Bank data showed that the ECB purchased bonds worth 74 billion euros in March, compared with 53 billion and 60 billion euros in February and January.
“The Governing Council expects PEPP purchases in the current quarter to continue to be at a significantly higher pace than in the first months of the year,” the ECB said Thursday, suggesting it will continue to buy more bonds in the coming months. compared to the first months of the year.
The ECB’s loose monetary policy aims to support 19 eurozone economies in their fight against the shock caused by the coronavirus. Many European countries have been forced to return to lockdown after the third wave of infections during the Easter season, and there is great uncertainty in the coming months.
“Incoming economic data, polls and high-frequency indicators suggest that economic activity may have slowed again in the first quarter of this year, but indicate a resumption of growth in the second quarter,” Lagarde told reporters. However, she added that there is a “general environment of uncertainty” about the economic outlook.
Market participants are looking forward to the June meeting next on the ECB calendar as the next key moment for monetary stimulus in the euro area. In the meantime, the euro is declining.
Data in the USA
The dollar was also helped to strengthen by strong data on the decline in primary claims of the unemployed. However, sales of existing homes fell 3.7% to 6.01 million units per year on a seasonally adjusted basis last month, the lowest level since August 2020, the National Association of Realtors said Thursday. Sales fell in all four regions.
Economists polled by Reuters had forecast March sales of 6.19 million units. The second monthly decline in sales in a row was marked by a sharp decline in signed contracts and applications for loans for home purchases in February.
Secondary home sales, which account for the bulk of US home sales, rose 12.3% year over year, staying well above their pre-pandemic level.