- Sterling jumps above $1.31
- Euro continues to rocket.
- Dollar quagmire continues.
- Asian equity markets search for direction.
GBPUSD 1.3140 GBPEUR 1.0906 EURUSD 1.2046 USDCAD 1.2097 GBPINR 84.03 GBPAUD 1.6240 GBPAED 4.826
- The pound jumped above $1.31 for the first time since early August yesterday, pulled up by a euro that was stronger across the board on the view that the head of the European Central Bank had not tried to strongly talk down the euro. With the euro trading around its strongest levels since January 2015 against the dollar, and with banks such as Morgan Stanley calling for the euro to reach parity with the pound in the coming months, there had been much market chatter that ECB chief Mario Draghi would try to knock the currency. As the dollar weakened to a 20-month low against a basket of currencies, sterling reached $1.3116, its strongest in five weeks, before dipping back below $1.31 by 1645 GMT. Traders said there was a growing weight of offers to sell sterling around $1.31-$1.32 which were likely to cap any further gains.
- The euro has reached a 2-1/2-year high versus the dollar today. ECB President Mario Draghi’s said yesterday that policymakers will decide on tapering this autumn, and that “probably the bulk of these decisions will be taken in October.” But Draghi also said the ECB must take into account the weakening of inflation owing to the strong euro, with the central bank having opted to lower some of its inflation projections to reflect a firming common currency. Furthermore, the ECB reaffirmed its ultra-easy policy stance by retaining rates at record lows, even keeping the door open to increasing bond purchases if needed, despite the euro zone’s best economic run since the global financial crisis.
- The dollar tumbled to its weakest level since the start of 2015 as fading expectations of U.S. interest-rate increases, North Korea tensions and a historically powerful hurricane unsettled investors. The dollar’s decline deepened during Asian trading today as the yen hit its strongest since November and investors girded for potential economic damage to Florida from the historically powerful Hurricane Irma. The dollar index against a basket of six major currencies was down 0.6 percent at 91.114 after going as low as 91.011, its weakest since January 2015 and on track for a 1.85 percent weekly loss.