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MORNING BELL: ECB raises inflation forecast

The U.S. dollar hit its lowest against the euro in over two weeks on Wednesday after the European Central Bank kept monetary policy steady despite recent market volatility and Bund yields extended their rise. The ECB sees no reason to adjust its monetary policy stance in response to a recent rise in bond yields in Europe, ECB President Mario Draghi told a news conference after the bank held interest rates as expected. That sentiment from Draghi, in addition to the ECB raising its 2015 inflation forecast, helped boost the euro. The euro was last up 1.07% against the dollar at $1.12695, after hitting a more than two-week high of $1.12855 after posting its second biggest daily gain since October, 2011 on Tuesday.

South Africa's rand weakened against the dollar on Wednesday as investors remained worried about the struggling local economy, while the greenback was boosted by solid U.S. private sector employment data. The rand failed to find strength from central bank Governor Lesetja Kganyago's comments in which he hinted at small rate hikes to help tame inflation pressures. At 15:28 GMT the rand was trading 0.73% down, at 12.2865 to the dollar from its closing level on Tuesday.

A sudden wave of sell orders early on Wednesday, followed by a bout of buying a couple of hours later whipsawed U.S. crude oil prices, puzzling even veteran traders used to big gyrations in the run-up to an OPEC meeting. The price of U.S. benchmark crude surged as much as 77 cents per barrel, or 0.6% in early trading, as almost 5.2 million barrels of crude exchanged hands in just five minutes.

 

 



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