Will the ECB Stop the Surging Euro?

According to the latest Survation poll conducted on Friday and Saturday, British Prime Minister Theresa May's lead over the opposition Labour Party has shrunk from 17 to just 1 percentage point.

The greenback was little changed at 109.420 yen, not far from 109.225, its lowest since April 21 plumbed overnight.The dollar has lost 0.9 percent against the yen this week, also pressured by a sharp drop in U.S. Treasury yields to seven-month lows as investors sought the safety of government debt.The U.S. currency was seen coming under more pressure as previously bullish equities also began declining.

The dollar index, gauging the greenback against the currencies of six major United States trading partners, was virtually unchanged from where it opened the day in late European trading hours after previously falling close to yesterday's near seven-month low of 96.52.

It has been reported that Comey plans to testify to conversations in which U.S. President Donald Trump pressured him to drop his investigation into former National Security Advisor Mike Flynn, who was sacked for failing to disclose conversations with Russian officials.

Euro trade is likely to be influenced by the European Central Bank (ECB) on Thursday, but as analysts expect there will not be any major shifts in tone from the bank it's more likely United Kingdom political news will influence GBP/EUR.

The pair rebounded later in the day hitting a two-week high of 1.2971 along the way.

The news promptly sent the euro tumbling against the dollar and the pound.

"But (for us) that would be a huge euro buying opportunity, because European Central Bank normalisation IS coming".

The ECB may even discuss dropping some of its pledges to ramp up stimulus if needed, four sources with direct knowledge of the discussions told Reuters last week.

The common currency was 0.1% higher at US$1.127 on Tuesday.

After last week's disappointing but still optimistic US Non-Farm Payroll results, investors are confident that the US economy is strong enough to support another interest rate hike from the Federal Reserve. Average hourly earnings rose 0.2 percent in May, climbing 2.5 percent year-on-year.

While London's main FTSE 100 stock index ended the day flat, the FTSE 250 which has many more British companies shed almost 1.1 percent amid recent tightening in opinion polls between Conservative Prime Minister Theresa May and main opposition Labor leader Jeremy Corbyn.

The Dollar Index (DXY) is gaining ground this morning, up by +0.42% at the time this was written, no thanks to any positive developments out of the US.

Chinese shares .CSI300 and Hong Kong shares .HSI bucked the trend, rising 0.1 percent and 0.3 percent respectively.

  • Zachary Reyes