Euro nears US$1.20 in wake of Yellen, Draghi comments

The dollar has been badly beaten ever since Friday, although a lot of investors aren’t assuming or expecting any monetary policy from Yellen last Friday, a bunch had also expected at least a tinge of comment or traction from the Federal Reserve’s Chair. After all, the common currency’s latest rally this week has been triggered by ECB-president Mario Draghi not mentioning the euro’s strength in his Jackson Hole speech.

As reported at 11:26 am (BST) in London, the EUR/USD was trading at $1.1935, a gain of 0.10%; the pair had earlier hit a peak of $1.1966, the highest price since January 2015 while the session low stands at $1.19150/.

In the US, fallout from Hurricane Harvey, now a tropical storm that continued to dump devastating rain in much of Texas, including on key oil refining areas, was holding back the dollar.

USA stocks rebounded from a sharply lower open on Tuesday and helped an index of global equity markets pare losses as investors shrugged off concerns over North Korea’s latest missile test. The dollar index, which measures the greenback against a basket of six major rivals, fell as much as 0.6 percent to hit its lowest since May 2016 of 92.184.

European share markets closed lower, with the pan-regional FTSEurofirst 300 index slipping 0.05 per cent, even as an index of emerging market stocks rose.

Finnish paper makers Stora Enso and UPM-Kymmene fell 3.7 to 5.1 per cent after a report that Danske Bank downgraded them, citing a weaker United States dollar, higher input costs and lower prices of paper mass.

She said the reforms put in place after the 2007-2009 financial crisis had strengthened the financial system, without impeding economic growth. The greenback extended last Friday’s losses when Federal Reserve Chairman Janet Yellen made no reference to USA monetary policy in her Jackson Hole speech, disappointing some dollar bulls and those who had hoped for hints on the Fed’s rate plans. It’s unclear how bad the damage is to facilities along the state’s Gulf Coast but preliminary signs indicate widespread losses, which will have implications for the US economy and oil and gas prices.

The pan-European Stoxx Europe 600 index, the German DAX and the U.K.’s FTSE 100 all edged down by 0.1 percent while France’s CAC 40 index shed 0.2 percent.

The 30-year Treasury yield was trading at 2.751- a fall of ~0.05%. Trading volumes are likely to be thin amid a national holiday in Britain.

“The strong euro is weighing on European stock markets”, said London Capital Group analyst Ipek Ozkardeskaya. It gained 1.3% for all of last week.

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