Mnuchin said: ‘Obviously a weaker Dollar is good for us as it relates to trade and opportunities.’ He stated that the US Dollar’s short-term pricing was ‘not a concern of ours at all’. In Hong Kong, the Hang Seng corrected lower by 0.8%, while in Europe, futures tracking the Euro stoxx 50 suggest the index could open slightly lower.
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Draghi has been credited with single-handedly ending rampant market speculation about a break-up of the euro zone in July 2012 by pledging to do “whatever it takes” to save the euro. Still, we would expect Draghi to emphasize that any changes to forward guidance will only be gradual and that the sequencing (rate hikes only after net QE purchases are over) is something that will not be altered.
Today, investors turn their attention to the European Central Bank policy meeting, where there is a risk that President Draghi echoes recent remarks from his colleagues and expresses discomfort with the recent strength of the euro, triggering a correction lower. Currently, the central bank of the region intends to buy bonds worth 2.5 trillion Euro by September this year.
Elsewhere, the Brazilian real strengthened the most in eight months and the Ibovespa stock exchange rose to a record after a panel of judges upheld the conviction of former President Luiz Inacio Lula da Silva on graft, a ruling that would prevent him from running in the general election.
In fact he states that the U.S. would welcome a weaker dollar, and that it would help make the USA more competitive on trade and more attractive to investors.
In what the Frankfurt institution says is a side effect – but critics allege is by design – its policy has also suppressed the value of the euro against other currencies, supporting growth by encouraging exports and inflation by making imports more expensive.
Yields on most euro zone government bonds, particularly the higher-rated ones, have risen in recent weeks as a booming euro zone economy fuels inflation expectations and on bets the European Central Bank would withdraw its 2.55 trillion euro bond-buying scheme and hike rates sooner rather than later.
This will contribute to both favorable liquidity conditions and an appropriate monetary policy stance. Aside from that, Thursday’s European Central Bank meeting holds the key to the Euro this week. This was weaker than the forecasts of a 0.4% increase on the quarter. His remarks extended the United States currency’s recent slide.
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Investors will also be eyeing the detailing of corporate earnings. A reversal at this level could signal a near term decline as price could be seen correcting to 1.2281. The number of traders net-long is 20.4% lower than yesterday and 14.7% lower from last week, while the number of traders net-short is 6.2% higher than yesterday and 0.9% higher from last week. “What we are seeing now is some profit-taking”.
