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Euro surges after Draghi comments

Thursday, March 06 15:23:28

The euro jumped against the dollar today to its highest since December and to a peak against the yen not seen since Jan. 23 after the European Central Bank signalled no need for new economic stimulus.

ECB President Mario Draghi told a news conference ECB policymakers had concluded that economic conditions did not require shifts in monetary policy.

"The lack of any form of easing or action from the ECB helped the euro because it suggests that the economy is on track," said Vassili Serebriakov, currency strategist at BNP Paribas in New York.

The euro rose as high as $1.3832 during Draghi's news conference before settling back to $1.3827, for a rise of 0.6 percent on the day. That peak is the highest since December.

The euro also gained sharply against the yen, settling back to a 1.4 percent gain at 142.45 yen after touching a high of 142.63 yen last touched on January 23.

The dollar index was off 0.25 percent to 80.109 after showing gains in earlier, overseas trading.

The ECB on Thursday kept interest rates on hold, shaking out some bets of a cut in base rates to support euro zone growth and weaken returns on the single currency versus its peers.

The euro has performed robustly against the dollar so far this year, confounding predictions by many banks it would fall on the prospect of further loosening by the ECB at a time when the U.S. Federal Reserve is going in the opposite direction.

Simon Derrick, strategist at Bank of New York Mellon in London, said one element in the euro's strength had clearly been the higher returns offered by peripheral euro zone bonds.

Any move to raise liquidity in the banking sector should reduce returns overall but yields on government securities in Spain or Italy are still well above what investors can get in the United States or Japan.