Draghi to Signal Stimulus: Euro Remains Low

May 3, 2012 - PRLog -- The Euro continued to remain dull, following a decline for three continuous days on bets that European Central Bank President Mario Draghi will hint at further stimulus measures to counter the region’s debt crisis after Thursday’s policy meeting.

The currency of 17 nations, the Euro saw A 0.2 percent drop from a two-week low versus the yen before Spain auctions debt. The dollar showed some resilience as compared to its 16 major counterparts, given the demand for an investment haven. On the other hand New Zealand saw all time lows since 2010 in its currency’s value.

The euro was at $1.3145 as of 12:35 p.m. in Singapore after sliding 0.6 percent to $1.3158 in New York yesterday. It fell 0.1 percent to 105.39 yen after touching 105.13 yesterday, the least since April 16. The dollar was little changed at 80.18 yen. Japan’s markets are shut today and tomorrow for public holidays.

“There’s a very good chance that ECB President Draghi is going to be very dovish,” said Joseph Capurso, a currency strategist in Sydney at Commonwealth Bank of Australia. “There’s potential that demand for Spanish bonds is quite weak and that would, I expect, push the euro down as well”, he added.

Spain Steps Up

Spain is going to auction three and five year notes today amid speculation that the fourth-largest economy in Europe will follow Greece, Ireland and Portugal in seeking a bailout. Spain’s borrowing costs have been contained after the ECB conducted a three-year loan program, known as the longer-term refinancing operations. Julian Jessop, London-based chief global economist at Capital Economics Ltd., wrote in a note, “The ECB’s LTROs had a major impact when they were first announced in December last year, but the same trick will be hard to pull off again!”

The whole of Europe’s currency dropped because its manufacturing levels were below 50 for the ninth consecutive month indicating contraction. Also, the number of jobless in the currency bloc was at a 15- year high of 10.9 percent in March. While the Dollar climbed a nice 6 percent and the Yen strengthened by 5.4 percent, the Euro has lost 6.9 percent in the last Twelve months.

Jobs in the United States

According to ADP Employer Services, employment in the Private sector increased by 119,000 in April, which was the smallest gain in seven months.

April saw an unexpected rise in the unemployment figures in Germany. New Zealand’s jobless rate saw the highest rise in level since 2010. New Zealand however didn’t portray such a pretty picture at all.

Australia’s Dollar

Analysts led by Selena Ling at Oversea-Chinese Banking Corp. in Singapore found out that the Australian Dollar would probably remain largely neutral with the nearest ceiling at its 200 day moving average. A decline toward $1.02 may see support materializing, they wrote. The Aussie declined 0.3 percent to $1.0300 today, while its 200 day moving average was at $1.0351

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