Euro holds gains on bets for ECB tightening but stocks mixed
(AFP) The euro held its gains on Monday as traders bet the European Central Bank will start to wind down its crisis-era stimulus programme, while lower expectations for further tightening in the United States weighed on the dollar.
While ECB boss Mario Draghi made no mention of the bank's plans for its bond-buying scheme at a much-anticipated speech Friday, analysts said his optimism for the eurozone economy was enough to fuel euro buying.
Janet Yellen's decision not to discuss the Federal Reserve's plans for future interest rate hikes was also seen as an indication of the US central bank's reticence to announce any more increases.
The single currency rose to $1.1926 Friday, its highest since January 2015 and managed to maintain that level Monday. It was also at eight-year highs against the pound, while the dollar continued to struggle against the yen.
While the ECB is widely expected to soon begin tapering its stimulus, its policymakers are concerned about the impact of a strong currency on the bloc's exports.
"Mario Draghi will be tearing his hair out," said Greg McKenna, chief market strategist at AxiTrader.
"If saying nothing can drive the euro to its highest level since January 2015 then the ECB president and his colleagues will be genuinely worried about the impact an announcement to further reduce its QE program could have on the single currency."
On equity markets Hong Kong extended its winning run into a fifth-straight day and putting it at its highest level since summer 2015. Shanghai added more than one percent.
However, Tokyo ended the morning 0.1 percent lower, Sydney shed 0.7 percent and Seoul was off 0.4 percent.
Tech giant Samsung sank more than one percent, extending Friday's losses after Lee Jae-Yong, de facto head of the world's biggest smartphone maker, was jailed for five years for bribing South Korea's ousted president and other offences.
The main US oil contract West Texas Intermediate edged down in early trade after surging at the end of last week as energy companies were forced to shut down some of their operations because of deadly Hurricane Harvey.
Key figures around 4:30am CET
- Tokyo - Nikkei 225: DOWN 0.1 percent at 19,430.65 (break)
- Hong Kong - Hang Seng: UP 0.7 percent at 28,034.89
- Shanghai - Composite: UP 1.1 percent at 3,369.64
- Euro/dollar: UP at $1.1928 from $1.1926 at 2050 GMT
- Pound/dollar: UP at $1.2889 from $1.2876
- Dollar/yen: DOWN at 109.17 yen from 109.30 yen
- Pound/euro: UP at 1.0808 euros from 1.0801 euros
- Oil - West Texas Intermediate: DOWN 16 cents at $47.71 per barrel
- Oil - Brent North Sea: UP 14 cents at $52.55 per barrel
- New York - Dow: UP 0.1 percent at 21,813.67 (close)
- London - FTSE 100: DOWN 0.1 percent at 7,401 (close)