The euro at its lowest in nearly two years – Expansion

The euro at its lowest in nearly two years – Expansion

This is the end of the strong euro, and exporters of the old continent rejoice … The euro Thursday fell to its lowest level in nearly two years against the dollar, 1 , 2697 dollar in the early morning, its lowest level since mid-November 2012 he climbed back in the day to almost 1.2746 dollars.

“The juxtaposition of the announcement of new disappointing numbers in the euro area and conversely the surprise property indicator in the United States has unsurprisingly pushed the euro below the threshold of 1 28 dollar “Wednesday explained the analysts of the National Australia Bank.

A continuing trend for nearly 3 months

This trend continued Thursday, bringing gains in the dollar “eleven consecutive weeks, which has not been seen since the introduction of floating exchange rates in the early 1970s, “said Mr. Smith. For the analyst, this movement is due to a “change of momentum in the foreign exchange market, as the dollar begins resolutely be seen not as a funding currency but as an active” in which to invest.

The euro remained well sealed by a wave of disappointing indicators in the eurozone, including Germany, which fueled speculation about a new relaxed monetary policy of the European Central Bank (ECB) to Following its meeting next Thursday.

The ECB maintains movement

In addition, recent reviews of the President of the monetary institution, Mario Draghi, have been interpreted by traders as the expression of the will of the Central Bank to implement new measures to support the economy, including a program of asset purchases. This type of measurement relaxing inflates the money supply in circulation, which tends to depreciate the value of the currency, in contrast to a tight monetary policy that tends to renchérir. “The divergence of monetary policy between the Federal Reserve (Fed) and the European Central Bank becomes very obvious,” has raised Jameel Ahmad, an analyst at FXTM.

The decision by the ECB in early September to lower interest rates and launch a share buyback program of asset-backed debt securities (ABS) caused a meltdown of the euro in 1 30 dollar when he was grazed in late May $ 1.40, rising to highest level in over three and a half years (1.3993 dollar). And while the ECB could soon launch asset purchases, “the Fed will stop QE in less than a month, which should be seen as a major step towards normalization of monetary policy” noted Mr. Ahmad.

The greenback and continued his side to regain strength, enjoying the publication this week in the United States a strong indicator in real estate and a less than expected increase in entries weekly unemployment benefits last week.