Please try another search
Currencies in the Asia-Pacific region made sweeping gains against the euro on Thursday night after the European Central Bank announced a cautious approach to the removal of monetary stimulus.
Further to a zero percent interest rate, the ECB is currently buying €60 billion worth of assets (bonds) each month, with the goal of keeping eurozone borrowing rates extremely low. The size of this “quantitative easing” (QE) program was halved on Thursday (changes to commence in January) after the bank’s president, Mario Draghi, announced that the first three quarters of next year would see monthly purchases of only €30 billion.
This tapering of the bank’s QE program, which is akin to monetary policy tightening, was largely expected and consequently was outweighed, in terms of influence on foreign exchange rates, by Draghi’s generally dovish remarks.
There will be no “sudden end” to QE, said Draghi, and interest rates in the eurozone will be held at record lows “well past” the as yet undetermined termination date of QE.
As a consequence, the euro tumbled, to the benefit of Asia-Pac.
By Friday morning, the Chinese yuan had climbed to a fifteen-week high against the euro. The yuan’s 1.5% appreciation forced EUR/CNY down to 7.719, from rates around 7.835 sixteen hours earlier.
The currencies of the Southeast Asian bloc of Singapore, Malaysia and Thailand all strengthened against the euro to levels unseen since July. Proportionally, the currencies’ gains were similar to that made by the yuan. EUR/SGD, EUR/MYR and EUR/THB fell to 1.591, 4.925 and 38.641 respectively.
One day prior to the ECB meeting, the Japanese yen had fallen to its weakest level against the euro in nearly two years (EUR/JPY 134.50). Thursday’s announcements have of course produced a sharp reversal. The yen strengthened by 1.3% against the euro, driving EUR/JPY down from a pre-ECB rate of 134.30 to 132.60 on Friday morning. The yen nonetheless remains extremely weak by recent standards. Against the euro, it has lost 18% of its value since June 2016.
For yen traders, attention now turns to Tuesday’s meeting of the Bank of Japan, at which the bank will release its quarterly report on the Outlook for Economic Activity and Prices. At the meeting, no changes to the BoJ’s own QE program or interest rate are expected. The bank’s monthly policy statement is scheduled for 11:50am local time (GMT+9), with a press conference at 2:30pm. No time has been set for the announcement on rates or for the outlook report.
EUR/INR’s 1.6% fall to 75.55 marked the Indian rupee’s strongest level against the euro in nine weeks and also its best one-day performance in sixteen months.
As with the yen, the Australian and New Zealand currencies were staring at long-term lows against the euro (EUR/AUD, EUR/NZD highs) prior to the ECB’s meeting. Each of the currencies has since reversed by more than a percent to respective per-euro rates of 1.5186 and 1.7008.
Last week, the US dollar fluctuated as inflation data came in above expectations, sparking volatility. Amid talks of potential shifts in Federal Reserve policy, investors are...
Bearish: We are currently @ 1.2735 in a channel in a range. We are continuing a third wave and looking to continue the channel to the ATR target @ 1.2680 with a further S4...
The Japanese yen is showing limited movement to start off the week. In the European session, USD/JPY is trading is almost unchanged at 149.07.Will the BoJ Raise Rates on...
Are you sure you want to block %USER_NAME%?
By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.
%USER_NAME% was successfully added to your Block List
Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.
I feel that this comment is:
Thank You!
Your report has been sent to our moderators for review
Add a Comment
We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:
Enrich the conversation, don’t trash it.
Stay focused and on track. Only post material that’s relevant to the topic being discussed.
Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.
Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.