Euro Rises After ECB’s Schnabel; Yen Extends Gains
The dollar fell versus all Group-of-10 peers amid month-end flows while the euro rose to a fresh day high after hawkish comments from ECB Executive Board member Isabel Schnabel.
EUR/USD rises 0.5% to 1.0540 before paring gains; Schnabel said that the central bank needs to be wary of cutting interest rates too far as borrowing costs are already near a level that no longer restrains the economy and going lower could backfire.
Money markets pared bets on ECB rate cuts after the comments, seeing 146 basis points of easing through the end of 2025, lower by four basis points.
The Bloomberg Dollar Spot Index extends losses after the Europe open as month-end selling that surfaced during the Tokyo fix picked up pace; it’s down as much as 0.5% after advancing 0.2% Tuesday.
10-year US Treasury yields down four basis points to 4.27%.
Liquidity in the options market is rather thin while spot volumes picked up during London hours to around 80% of recent averages, Europe-based traders say.
US data later Wednesday include the PCE index, jobless claims and personal spending.
USD/JPY falls 1.1% to 151.43, erases post-US election advance; one-week volatility rises by 120 basis points to 10.80%, highest in a week, while one-month rallies to 12.05% for the first time since Nov. 6.
NZD/USD rises as much as 1.2% to 0.5901, one-week high; RBNZ cut rates by half a percentage point as anticipated by a majority of economists surveyed by Bloomberg and signaled a more hawkish-than-expected outlook for 2025.
A majority of NZD/USD buying is driven by leveraged short-covering, according to Asia-based FX traders.
AUD/USD halves a 0.4% advance to trade at 0.6487; Australia’s CPI indicator for October advanced 2.1% from a year earlier, below economists’ estimate of a 2.3% increase, data from the Australian Bureau of Statistics showed.
GBP/USD up a third day, gains 0.2% to 1.2598, boosted by broad dollar weakness.
Bank of England Deputy Governor Clare Lombardelli said she needs to see more evidence of cooling price pressures before she backs another interest-rate cut, in an interview published late Tuesday.
Source : Bloomberg
