By TraderVox.com
Tradervox.com (Dublin) – The 17-nation currency rose to its strongest in two-months against the Japanese currency after Mario Draghi, the European Central Bank President, rolled out a plan to purchase government bonds from countries with high borrowing cost. The announcement spurred demand for riskier assets, causing the US dollar and the yen to weaken against commodity related currencies. The greenback fell prior to a report expected to show a slowing pace in US hiring. The euro had earlier weakened against the greenback on speculation the euro zone will register an economic contraction this year.
According to Charles St-Arnaud, who works as a Foreign Exchange Strategist in New York at Nomura Holdings Inc, the Draghi’s announcement has helped to reduce the tail risk of another intensification of the debt crisis. In his statement to investors, Charles, indicated that the worst might be over for the euro-dollar pair albeit for the short term. He said that the pair might continue to fall in the long term as there are other risks involved in effecting the plan. The announced pushed the Standard & Poor’s 500 Index up by 2 percent, boosting the demand for commodity related currencies.
The US currency fell against currencies such as the Canadian, Australian, and the New Zealand dollars as speculation rose about the slowing labor market in the US, spurring concerns that the Fed will work towards implementing another round of quantitative easing. The Canadian dollar increased by 0.8 percent against the dollar to trade at 98.27 Cents per US dollar. The Australian dollar advanced by 0.9 percent while the Kiwi advanced by the same margin. The Dollar Index dropped by 0.2 percent to 81.103, showing that the currency has dropped against six of its most traded counterparts.
On the other hand, the euro rose by 0.8 percent against the yen to exchange at 99.60 at the close of trading in New York yesterday. It had earlier touched 99.81 which is the strongest it has been since July 5. The euro advanced by 0.2 percent against the US dollar to trade at $1.2631 at the same time.
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