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Forex - Dollar Down as Draghi's Attempts to Curb Hawkish Expectations Fail

ForexJan 25, 2018 01:10PM ET
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Investing.com – The dollar pared some of its losses against a basket of major currencies but remained well below three-year lows amid mixed economic data, and ongoing euro strength after the European Central Bank policy meeting.

As was widely expected the European Central Bank (ECB) left rates unchanged, while ECB president Mario Draghi attempted to stifle growing expectations that the central bank is nearing a shift toward a more hawkish stance on monetary policy.

Draghi confirmed that the Eurozone has shown robust economic expansion but warned that the recent surge in the euro was a source of uncertainty that could warrant further attention should the US continue to express support for a weak dollar.

This comes a day after Treasury Secretary Steve Mnuchin said “Obviously a weaker dollar is good for us as it relates to trade and opportunities."

Draghi also said that while strong momentum has underpinned confidence for faster inflation growth, he expected that inflation would likely hold at current levels in the months ahead, suggesting that recent investor expectations for a hawkish ECB may have been exaggerated.

Traders, however, appear to have upped their bets on a shift in ECB policy, which now is expected in March, as they piled into the euro against the dollar, which jumped 0.67% to $1.2498.

A mixed pair of economic reports, meanwhile, did little to improve sentiment on the greenback as initial jobless claims beat forecasts while new homes sales fell undershot expectations.

The Commerce Department said on Thursday new home sales declined 9.3 percent to a seasonally adjusted annual rate of 625,000 units last month.

The U.S. Department of Labor reported Thursday that initial jobless claims increased 17,000 to a seasonally adjusted 233,000 for the week ended Jan. 20.

GBP/USD rose 0.18% to $1.4266, while USD/JPY fell 0.59%.

USD/CAD fell 0.21% to C$1.2317 and remained near four month lows of C$1.2296 following the strong Canadian retail sales data.

Forex - Dollar Down as Draghi's Attempts to Curb Hawkish Expectations Fail
 

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