Posted on March 23, 2015 by the XM Investment Research Desk at 2:22 pm GMT
Dollar weakness prevailed today and the euro gained to above the 1.09 level. It was a quiet day in terms of data but the main event today was on Mario Draghi’s speech. The ECB President was due to testify on monetary policy before the Economic and Monetary Affairs Committee. His initial comments were on Eurozone inflation, which he said he expected to start increasing gradually towards the end of the year. He also reassured markets there were enough bonds for the ECB to purchase under the new QE program. The euro rose to as high as 1.0944 in the early stage of Draghi’s speech. Comments that risk to the euro area stability were contained helped buoy the single currency.
Another development that could still drive the euro today is the meeting between Greece’s Prime Minister Alexis Tsipras and German Chancellor Angela Merkel in Berlin. The meeting will be followed by a press conference. There is concern over Greece as it only has enough money until April 9. The general discussion between the two leaders will likely center on the ability of Greece to service its debt as well as the broad list of reforms the country will be prepared to take.
Sterling attempted to rebound after a fall in the Asian session. It approached 1.4955 but was unable to sustain the upward momentum and slipped to 1.4930. The main risk events for the pound will be Tuesday’s UK inflation data. The February headline CPI reading is expected to rise 0.3% m/m and 0.1% y/y. Bank of England Governor Mark Carney’s speech on March 27th will also be a key event to watch.
The dollar extended losses against the yen in the European session after opening with a gap lower in Asia today. St Louis Fed President James Bullard made some comments while speaking on CNBC today which signaled that there was some concern among Fed officials over the greenback’s strength. The dollar fell to a low of 119.57 yen. On Friday the pair hit a high of 121.19. US existing home sales data released today showed a marginal increase in February, temporarily halting the dollar’s decline. Sales rose 1.2% last month to 4.88 million versus March’s 4.82 million homes. Tuesday’s US CPI data now come into focus.