The dollar has been plagued not only by doubts whether the Fed will carry through with a third rate hike this year but by worries that the United States is also heading towards a government shutdown at the end of September due to disagreements between the President and Congress over fiscal policy.
The euro gained to its highest level in two years against the greenback following Draghi’s speech at the central bankers’ symposium, where he talked broadly about risks to free trade. The Australian dollar rose 0.05 percent to $0.7938, as the US dollar fell against a basket of currencies and hit multi-year lows against the euro, while the New Zealand dollar was poised for its biggest monthly drop since January 2016.With a thin economic data calendar on either side of the Tasman sea, traders looked overseas for market cues.
At an event entitled “Fostering a Dynamic Global Economy” markets had wanted to hear something about balance sheet normalisation from Ms Yellen, and about QE (quantitative easing) tapering from Mr Draghi.
US 10-year Treasury yields declined seven basis points to 2.09 percent, while German 10-year yields fell as much as five basis points to 0.32 percent, the lowest since June 27.
Trade in general was subdued, with the London market closed for a public holiday.
The kiwi dollar traded at 60.51 euro cents as at 8am in Wellington, having touched 60.43 cents this morning, the lowest since May a year ago, from 60.67 cents in NY on Friday.
Energy shares, up 0.52 percent, also advanced on a climb in oil prices as major Hurricane Harvey drew closer to the Texas Gulf Coast.
The US dollar dropped to its lowest in roughly 16 months against a basket of major currencies today.
At the auction on 28 August, the Euro-dollar exchange rate reached a peak in 2015.
According to economists at French investment bank BNP Paribas, a 10 percent rise in the euro corresponds with a fall of almost 0.5 percentage points in inflation over the next 12 months.
However, Janet Yellen’s speech on Sunday was more significant in that she defended the measures taken since the 2008 financial meltdown to tame financial markets, including those regulations President Donald Trump has vowed to scrap.
Germany’s DAX lost 0.11 per cent to 12,167.94. The company’s stock, which fell more than 1 percent after Samsung Group’s de-facto head Jae Y. Lee was given a five-year prison term Friday, extended losses to trade lower by 0.47 percent in early trade.
After falling last week, the US Treasury yields are slightly weaker in the early hours on Monday.
Things were quiet on the US economic front this morning. There are high-impact U.S. announcements each day of this week: Monday brings Trade Balance and Tuesday brings Consumer Confidence.
Britain’s FTSE 100 fell 0.08 per cent to 7,401.46 points as sterling rose towards the end of the session, but the blue chips still posted a 1.1 per cent gain.
Brent LCOc1 , the global crude oil benchmark, rose 0.6 percent to $52.72 a barrel, adding to Friday’s 0.7 percent increase.