US Dollar surges on ECB President Mario Draghi's dovish remarks
Frankfurt (Jan 21) The dollar rose on Thursday, hitting its strongest against the euro in two weeks, after European Central Bank President Mario Draghi suggested the bank could soon launch additional stimulus.
After the ECB kept interest rates unchanged as expected, Draghi said it would be necessary to review the bank's policy stance again at its next meeting on March 10. The euro fell below $1.08 for the first time in two weeks during his speech.
Draghi pointed to concerns over China and other emerging markets as well as market volatility and geopolitical risks, and said the tumult would prompt a March review of monetary policy. He told reporters the bank expected rates to "stay at present or lower levels for an extended period."
"Mr. Draghi certainly kicked open the door to action as soon as ... March. He sounded a concerned tone about global developments and how that can adversely impact already anemic inflation," said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington.
A supervisor inspects sheets of one dollar bills on the printing press at the Bureau of Engraving and Printing in Washington.
Watch out for this threat to company profits
"It's like a Draghi do-over. Last month he sparked this robust rally in the euro, and now he's taken back much of those gains."
The euro recovered slightly after the speech, and was last down 0.41 percent at $1.0828.
"I think the main take here is that if we continue to see market turmoil, if we continue to see oil grind lower, that's going to raise the stakes for March and leave the euro vulnerable to further falls," Manimbo said.
The dollar also made strides against the yen after Draghi's comments, rising 0.4 percent and moving comfortably above 117 yen. The greenback had fallen to 115.97 in overnight trading, its lowest since January 2015.
The yen has been the major beneficiary of the global market slowdown, as major drops in equity markets and oil prices have moved investors to seek out the safe-haven currency. It has added nearly 3 percent against the dollar since the start of January and just under 5.5 percent in the past six months.
The dollar also rose against the Swiss franc, the other major safe-haven currency, following Draghi's speech. It was most recently up 1 percent to 1.0115 francs per dollar.
The dollar index, which measures the greenback against a basket of six other major currencies, rose 0.45 percent to 99.547, its highest since Dec. 3, before trading at 99.42.
Source: CNBC
