Dollar Rises as Trade War Fears Fade

Mar 10, 2018, 01:10
Dollar Rises as Trade War Fears Fade

He said: "It means that the European Central Bank potentially is willing to continue buying €30bn per month beyond September, but has jettisoned the willingness to adjust the program in response to a change in economic conditions".

But it removed such statement from its communication Thursday, following a monetary policy meeting, indicating that stimulus in the region could come to an end in the near future.

The eurozone's economy grew at the fastest pace in a decade in 2017, although Mr Draghi stressed the downside risks, pointing specifically to protectionism.

The yield on the 10-year German bund fell 3 basis points to 0.625%, according to Tradeweb, as prices rose.

GDP expansion in the 19-member euro area indeed surged to 2.3 percent a year ago, but consumer prices have remained below expectations.

More news: Naga governor asks Neiphiu Rio to form government

More: You're not imagining it.

Viraj Patel, forex strategist at ING, told CNBC that Draghi did "just enough to appease the hawks in the committee".

"This is the first natural step toward normalization", said Piet PH Christiansen, an economist at Danske Bank A/S in Copenhagen.

Draghi will explain the decision in a press conference at 2:30 Frankfurt, when he will also present updated economic forecasts for economic growth and inflation.

Spot gold was at $1,325.54 an ounce by 1328 GMT, little changed from late on Wednesday, when it touched a one-week high of $1,340.42 before closing 0.6 percent lower. We will instead look closely to see whether recent disappointing inflation news will feed its way through to a downward revision in inflation estimates. The ECB chief also wondered aloud, "what's going to be the response of the exchange rate?" The index found support in Rolls-Royce Holdings (LON:RR), whose shares rallied 11.64 percent after the British engine maker reported that it had returned to annual profit a year ago. Shares of European exporters can be hurt when the euro rises, as euro strength can reduce revenue made overseas by such companies. As a result, the bank could be forced to change its monetary policy.

More news: Tonight's WWE Raw Preview: Elimination Chamber Fallout, Rousey's Raw Debut, Lesnar Appears

ECB President Mario Draghi had not been expected to rock the boat further with any talk of higher interest rates or more cuts to the lender's bond-buying program.

European Central Bank added that the Eurosystem will reinvest key payments from maturing securities acquired under the asset purchase program for a longer period of time after the end of its net asset purchases, and in any case for as long as necessary.

With the Eurozone economy now expanding at a much faster pace than anticipated, traders have been gearing up for an announcement at the coming meetings that the bank's quantitative easing programme could soon coming to an end.

Worries about a trade war have rattled world markets, dealing a blow to the dollar and threatening further upward pressure on euro - an unwelcome development for policymakers since the strong euro keeps inflation down and could complicate the ECB's exit strategy from quantitative easing.

More news: Researchers discover hidden supercolony of 1.5 million penguins