Latest News

UK News

Click Here to read UK News

Forex News

Click Here to read Forex News

Market News

Click Here to read Market News

Irish News
/fxcentre/i-want-to/read-news
FOREX-U.S. dollar perks up after ECB policy talk cools euro
Published at 22/04/2021 at 20:53

(Revises throughout with new comments, market action; new byline, changes dateline, previous NEW YORK/LONDON)

* Dollar gains vs euro, British pound, Australian dollar

* Euro gets no help from central bank press conference

* Dollar index remains near multi-week lows

* Graphic: World FX rates

By David Henry

NEW YORK, April 22 (Reuters) - The U.S. dollar rose against major currencies on Thursday as a shot of positive economic news contrasted with comments from the European Central Bank that euro zone weakness still requires the support of its current pace of bond purchases.

The move was reinforced late in the day by a risk-off, dollar bid when news broke that U.S. President Joe Biden will propose nearly doubling taxes on capital gains for people earning more than $1 million.

The dollar index against major currencies was up 0.2% to 91,303 in the late afternoon in New York after markets sifted through the ECB remarks and news that U.S. new unemployment claims had fallen to a 13-month low, setting the stage for blockbuster jobs growth in April.

The euro had been up about 0.1% against the dollar before the events, but later fell 0.2% on the day to $1.201.

ECB chief Christine Lagarde said policy makers had not discussed any phasing out the bond-buying program "because it premature." She said the economy is still "clouded with uncertainty" despite signs of improvement and progress with vaccinations.

Euro zone bond yields dipped after Lagarde spoke.

"Until you see better COVID numbers out of Europe, the euro's upside potential is going to be limited," said Ronald Simpson, managing director, global currency analyst at Action Economics in Safety Harbor, Florida.

Simpson added that if Biden's tax proposal goes forward it could hurt the greenback if it spurs stock investors with big gains to sell before it takes effect.

"That might keep pressure on the stock market, on and off, for the rest of the year, which would not bode well for the dollar if we start seeing outflows from U.S. equities," Simpson said.

The immediate impact was "not too serious," said Erik Bregar, head of FX strategy at Exchange Bank of Canada.

"We're seeing an extension of this morning's move post-ECB," Bregar said. "It is a classic risk-off, U.S. dollar bid."

The currency markets initially vacillated over what Lagarde revealed about the timing of interest rate hikes.

Alex Merk, chief investment officer at Merk Investments in Palo Alto, California, said the market heard that the ECB would like to pace its rate moves with those of the U.S. central bank but also that the two economies have different inflation trajectories.

In the end, Merk said, "there was no big substance there."

The back-and-forth of the currencies on Thursday morning was another example of how markets have been preoccupied with sorting out how quickly different economies will rebound from the pandemic and how their interest rates will fluctuate.

On Wednesday the Canadian dollar rose sharply after the Bank of Canada signaled rate hikes next year and said it was pulling back on asset purchases. The announcement marked the first Group of Seven central bank to move towards withdrawing stimulus.

Now markets are looking toward next week's meeting of the U.S. Federal Reserve and possible comments about how it views future changes in its easy monetary policy.

Yields on were little changed on the day at 1.55% despite rising about four basis points at one point.

Sentiment toward the dollar has weakened much of this month after a March spike in Treasury yields reversed course. But some analysts say the outlook over the longer term remains positive due to a strong U.S. economy and more coronavirus vaccinations.

Merk said, "Ultimately what matters is the progress with the pandemic" and what that means for a global recovery, inflation and interest rates.

In cryptocurrency markets, ethereum jumped as much as 10% during the day. Bitcoin slipped about 2% to $52,800.

========================================================

Currency bid prices at 3:31PM (1931 GMT)

Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid

Previous Change

Session

Dollar index 91.3030 91.1100 +0.22% 1.469% +91.4250 +90.9980

Euro/Dollar $1.2010 $1.2036 -0.20% -1.69% +$1.2070 +$1.1994

Dollar/Yen 108.0350 108.0400 +0.00% +4.56% +108.2300 +107.8150

Euro/Yen 129.74 130.03 -0.22% +2.22% +130.4600 +129.6800

Dollar/Swiss 0.9178 0.9172 +0.08% +3.75% +0.9191 +0.9145

Sterling/Dollar $1.3839 $1.3927 -0.64% +1.29% +$1.3948 +$1.3825

Dollar/Canadian 1.2501 1.2495 +0.06% -1.81% +1.2534 +1.2473

Aussie/Dollar $0.7707 $0.7753 -0.62% +0.16% +$0.7764 +$0.7692

Euro/Swiss 1.1021 1.1033 -0.11% +1.98% +1.1047 +1.1015

Euro/Sterling 0.8677 0.8641 +0.42% -2.91% +0.8702 +0.8635

NZ $0.7160 $0.7209 -0.69% -0.31% +$0.7213 +$0.7148

Dollar/Dollar

Dollar/Norway 8.3720 8.3410 +0.51% -2.37% +8.3910 +8.3130

Euro/Norway 10.0577 10.0368 +0.21% -3.91% +10.0729 +10.0127

Dollar/Sweden 8.4326 8.4015 +0.10% +2.88% +8.4506 +8.3861

Euro/Sweden 10.1283 10.1180 +0.10% +0.52% +10.1387 +10.1040

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ World FX rates ECB PEPP

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

(Reporting by David Henry in New York and Ritvik Carvalho in London; additional reporting by Stanley White in Tokyo; editing by Larry King, William Maclean and Andrew Heavens)

((David.Henry@thomsonreuters.com; +1-332-219-1974; Reuters Messaging: david.henry.thomsonreuters.com@reuters.net))