Dollar Rallies after Draghi Signals Normalization Would Be Gradual

Dollar Rallies after Draghi Signals Normalization Would Be Gradual

The dollar rose against the euro after the European Central Bank's made a decision to drop a pledge to increase asset purchases if necessary, and as President Mario Draghi downplayed the change.

Building materials group CRH, the largest stock on the index, advanced 1.1 per cent to €27.49, while Origin Enterprises rose nearly 1 per cent to €5.85, after it reported a 12.6 per cent rise in operating profit in the first half of its financial year.

Mario Draghi, president of the European Central Bank (ECB), discussed new stimulus measures for the euro zone on Thursday.

"While dropping a sentence that has been in the ECB's statement since 2016 is a significant change, Draghi gave his best trying to downplay exactly this significance during the press conference", said Carsten Brzeski, eurozone economist at ING. Draghi argued that the removal of the easing bias on asset purchases was in line with greater sentiment that inflation would converge to the target of close to, but below, 2 percent.

Today it said net asset purchases will run until the end of September, or beyond if necessary.

If anything the European Central Bank could be facing a bit of a problem in terms of its attempts to draw back from its easy monetary policy, particularly since the data isn't moving its way.

Its inflation projections were also unchanged for 2018 at 1.4 percent, but slightly lowered for 2019 from 1.5 to 1.4 percent.

The UK corporate calendar on Thursday has full-year results from outsourcer G4S, insurer Aviva, pizza chain Domino's Pizza, infrastructure project manager John Laing, property group Capital & Regional, John Lewis and Waitrose owner John Lewis Partnership, and Alfa Financial Software.

The highlight in the economic calendar on Thursday is weekly United States initial jobless claims - which are a prelude to the monthly jobs report on Friday - at 1330 GMT.

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Stocks in Europe and the USA also moved higher.

US President Donald Trump is set to formally declare tariffs on imported steel and aluminium as early as Thursday, according to his main trade adviser Peter Navarro.

In equities trading, a softer tone on threatened tariffs from the White House late on Wednesday helped Asian stock markets rise yesterday, continuing a week of volatility sparked by fears of a global trade war.

"The proclamation will have a clause that does not impose these tariffs immediately on Canada and Mexico", Navarro told Fox.

The dollar was down by 0.1 percent to 1.2893 against its Canadian counterpart.

Benchmark U.S. 10-year notes last rose 7/32 in price to yield 2.8571 percent, from 2.883 percent late on Wednesday.

The numbers were, however, affected by the week-long Lunar New Year holiday, which this year began on February 15.

An upbeat jobs report is likely to help strengthen the US Dollar on hopes that it will increase the chances of the Federal Reserve implementing up to four rate hikes this year.

Mr Draghi is also likely to face questions on recent stock market volatility and the prospect of a trade war.