EUR/USD Strengthens after ECB Meeting, GBP/EUR, AUD/USD Climb26 January 2018 by FC Exchange
Exchange rate specialists FC Exchange take a look at currency market events to impact AUD, EUR, GBP, and USD this week.
The pound to euro (GBP/EUR) exchange rate continued to register gains on Thursday, despite a surge in the euro against other currency majors following comments from European Central Bank (ECB) Chief Mario Draghi. The euro was able to extend its three-year high and break above the 1.25 mark against the US dollar (EUR/USD) as the ECB President was upbeat about the currency bloc’s recovery.
The US dollar has fallen further this week after US Treasury Secretary Steven Mnuchin commented that he welcomed the weaker US currency as it boded well for trade. Mario Draghi was asked about the weaker dollar and didn’t hold back, reminding reporters that the world’s leading economies had come to an agreement not to jawbone their currencies lower. Draghi continued that some fluctuations of late have been created with ‘the use of language… That doesn’t reflect the terms of reference we have agreed.’
While the central bank left its monetary policy the same, Draghi also said that the euro would need to be watched as its strength could potentially cause problems for the currency bloc’s growth. However, the Eurozone has been outperforming when it comes to growth figures and Draghi stated that he thought the risks were roughly equal. He said: ‘On the one hand, the prevailing strong cyclical momentum could lead to further positive growth surprises in the near-term. On the other hand, downside risks continue to relate primarily to global factors, including developments in foreign exchange markets.’
Meanwhile, it’s not just the euro reaching highs against the US dollar, the Aussie dollar has also registered gains. The Australian commodity currency has hit a 32-month high versus the buck after Mnuchin’s comments. The greenback had already been trending lower after President Trump decided to instate tariffs on washing machines and solar panels.
Friday could be an interesting one too, with the release of both UK and US growth numbers as well as the US advance goods balance. The ECB will also release its survey of professional forecasters.
Disclaimer: This economic update is provided by FC Exchange a Global Reach Group Company, industry leaders in foreign exchange. Authorised affiliates are permitted to reuse content.
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