Those who dreamed of a Euro dollar exchange rate daily see the fulfillment of their wish come closer. Without going that far, the euro fell back against the dollar on Thursday, falling to the lowest in eleven years and a half. The single currency could not manage to sustain a short rally fueled by comments deemed “encouraging” the President of the European Central Bank (ECB) Mario Draghi on the economic outlook in the eurozone.
Around 18:30 Paris, the euro bought 1.1011 dollars -after falling to 1.0988 dollars earlier in the day. The euro was still evolving around $ 1.12 earlier this week. The European currency also fell against the yen at 132.38 yen -atteignant its lowest level in a month.
The ECB QE cool traders
“The euro has followed a roller-coaster ride with the press conference by Mario Draghi (President ECB, Ed), “observed Christopher Vecchio, an analyst at DailyFX. Initially, the euro tried to recover, while the ECB president was within its growth forecasts.
But the single currency failed to hold its gains, on the contrary. “The euro has rapidly back to reality when Mr. Draghi reiterated that the asset purchase program, scheduled to begin next week could extend beyond the closing date scheduled for September 2016 “commented Ashraf Laidi, an analyst at City Index.
This program of “quantitative easing” or “QE” as an acronym for its name in English (“quantitative easing”) provides for the repurchase of approximately 1.140 billion of public debt and Private by September 2016, at the rate of 60 billion per month in order to boost the very low price dynamics in the eurozone. These purchases will commence on 9 March, Mr Draghi said Thursday, and will continue beyond September 2016 as inflation will not be a sustainable way on the path of the target level of 2%.
The Greek case weighs on prices
This program is intended to stimulate economic activity in the euro zone, resulting in liquidity injections in the financial system, which has the side effect of diluting the value of the single currency. Thus, “many observers expect that the program will continue well after the date of September 2016 announced by Draghi and suddenly the fact that this program will have the least impact is debate,” commented Dennis de Jong UFX.com.
In addition, traders opted for caution in a renewed uncertainty about the economic outlook in Greece. Draghi has stressed that emergency loans to Greece were extended while hammering that the ECB could not buy debt of the country today.
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