The Euro fell for the first time in five days against the Dollar after European Central Bank President Mario Draghi said policy makers may take the unprecedented step of charging banks to hold excess reserves.
The single currency dropped against all except one of its 16 most-traded peers as the ECB cut its benchmark rate and Draghi said policy makers had an Open mind on a Negative deposit rate. The Dollar rose the most in almost two weeks versus the yen after U.S. data showed the number of Americans filing claims for jobless benefits unexpectedly dropped to a five-year low. Sweden’s krona weakened as manufacturing in the nation shrank.
“The Euro was quite upbeat until Draghi made his comment that the ECB would be able to cope with any consequences of Negative deposit rates,” said [Dear Guest/Member you can't see link before click here to register], a currency strategist at HSBC Holdings Plc in London. “Previously, the language of the ECB on this front has characterized it as uncharted waters. Today, it seems the ECB is more Open to the idea. The Euro was clearly spooked by the mere concept of Negative deposit rates in the Euro zone.”
The Euro slid 1 percent to $1.3053 at 11:16 a.m. in New York after strengthening 1.3 percent during the previous four days. The 17-nation currency dropped 0.3 percent to 128.02 yen. The Dollar gained 0.7 percent to 98.06 yen. It climbed as much as 1 percent, the biggest intraday jump since April 19, after falling 0.3 percent earlier to 97.09 yen.
Krona Falls
Sweden’s krona weakened for the first time in seven days against the Dollar after [Dear Guest/Member you can't see link before click here to register] said its [Dear Guest/Member you can't see link before click here to register] of manufacturing based on a survey of purchasing managers fell to 49.6 in April from 52.1 the previous month.
The krona slid 1.1 percent to 6.5390 to the greenback. The Swedish currency has still strengthened 3.1 percent in the past 12 months, making exports less competitive.
Denmark’s krone declined versus most major peers after the nation’s central bank lowered its benchmark interest rate as policy makers in Copenhagen defended the currency’s peg to the euro. Nationalbanken said in a statement it cut its lending rate to 0.2 percent, from 0.3 percent. The deposit rate was held at Negative 0.1 percent. The bank doesn’t hold scheduled meetings and only changes interest rates to maintain the exchange rate.
The Danish krone dropped 0.8 percent to 5.7051 per dollar. It was little changed against the Euro at 7.4547.
Options Trading
Trading in over-the-counter foreign-exchange options totaled $12 billion at 10:51 a.m. New York time, compared with $21 billion yesterday, according to data reported by U.S. banks to the Depository Trust Clearing Corp. and tracked by Bloomberg. Volume in options on the dollar-yen exchange rate amounted to $2.8 billion, the largest share of trades at 23 percent. Euro- Dollar options were the second most actively traded, at $2.4 billion, or 20 percent.
Dollar-yen options trading was 77 percent below the average for the past five Thursdays at a similar time in the day, and euro-dollar options trading was 46 percent below, according to Bloomberg analysis.
The ECB lowered its [Dear Guest/Member you can't see link before click here to register] by a quarter percentage point to 0.5 percent as predicted by 45 of 70 economists in a Bloomberg News survey. The central bank reduced its marginal lending rate, which banks use for overnight credit, to 1 percent from 1.5 percent. It kept its deposit rate, which banks pay to park cash in the central bank, at zero.
“We will look at all the incoming data and stand ready to act if needed,” Draghi said at a press conference in Bratislava, Slovakia, where the ECB met.
‘Technically Ready’
Asked if further action could include taking the deposit rate into Negative territory from zero, he said the central bank is “technically ready” and that “we will look at this with an Open mind.”
Draghi said the ECB will continue to lend banks as much money as they need at least until the middle of 2014.
“It is the reference to the ECB being technically ready for Negative deposit rates that is now putting the Euro under pressure,” said Ian Stannard, head of European currency strategy at Morgan Stanley in [Dear Guest/Member you can't see link before click here to register]. “The market is likely to take this as a signal that the ECB has more room if required, hence putting the Euro under pressure.”
A gauge of [Dear Guest/Member you can't see link before click here to register] in the Euro area declined to 46.7 last month from 46.8 in March, London-based Markit Economics said today before the ECB decision. The reading has been below 50, which indicates contraction, for 21 consecutive months.
The Dollar strengthened for the first time in six days against the yen after the U.S. Labor Department said applications for unemployment insurance payments fell by 18,000 to 324,000 in the week ended April 27, the fewest since January 2008. Economists forecast 345,000 claims, according to the median estimate in a Bloomberg News survey.
Chinese Manufacturing
[Dear Guest/Member you can't see link before click here to register]’s currency rose earlier against most major peers as data showed [Dear Guest/Member you can't see link before click here to register]’s factory output slowed, spurring demand for the relative safety of the yen. HSBC Holdings Plc and Markit Economics said their [Dear Guest/Member you can't see link before click here to register] of Chinese manufacturing fell to 50.4 in April from 51.6 the previous month.
The yen has dropped 3.2 percent in the past three months, according to Bloomberg Correlation-Weighted Indexes that track 10 developed-market currencies. The Dollar gained 2.9 percent and the Euro fell 1.9 percent.
The [Dear Guest/Member you can't see link before click here to register], which Intercontinental Exchange Inc. uses to track the greenback against the currencies of six U.S. trading partners, rallied 0.9 percent to 82.208 after dropping to 81.331 yesterday, the lowest since Feb. 25.
The single currency dropped against all except one of its 16 most-traded peers as the ECB cut its benchmark rate and Draghi said policy makers had an Open mind on a Negative deposit rate. The Dollar rose the most in almost two weeks versus the yen after U.S. data showed the number of Americans filing claims for jobless benefits unexpectedly dropped to a five-year low. Sweden’s krona weakened as manufacturing in the nation shrank.
“The Euro was quite upbeat until Draghi made his comment that the ECB would be able to cope with any consequences of Negative deposit rates,” said [Dear Guest/Member you can't see link before click here to register], a currency strategist at HSBC Holdings Plc in London. “Previously, the language of the ECB on this front has characterized it as uncharted waters. Today, it seems the ECB is more Open to the idea. The Euro was clearly spooked by the mere concept of Negative deposit rates in the Euro zone.”
The Euro slid 1 percent to $1.3053 at 11:16 a.m. in New York after strengthening 1.3 percent during the previous four days. The 17-nation currency dropped 0.3 percent to 128.02 yen. The Dollar gained 0.7 percent to 98.06 yen. It climbed as much as 1 percent, the biggest intraday jump since April 19, after falling 0.3 percent earlier to 97.09 yen.
Krona Falls
Sweden’s krona weakened for the first time in seven days against the Dollar after [Dear Guest/Member you can't see link before click here to register] said its [Dear Guest/Member you can't see link before click here to register] of manufacturing based on a survey of purchasing managers fell to 49.6 in April from 52.1 the previous month.
The krona slid 1.1 percent to 6.5390 to the greenback. The Swedish currency has still strengthened 3.1 percent in the past 12 months, making exports less competitive.
Denmark’s krone declined versus most major peers after the nation’s central bank lowered its benchmark interest rate as policy makers in Copenhagen defended the currency’s peg to the euro. Nationalbanken said in a statement it cut its lending rate to 0.2 percent, from 0.3 percent. The deposit rate was held at Negative 0.1 percent. The bank doesn’t hold scheduled meetings and only changes interest rates to maintain the exchange rate.
The Danish krone dropped 0.8 percent to 5.7051 per dollar. It was little changed against the Euro at 7.4547.
Options Trading
Trading in over-the-counter foreign-exchange options totaled $12 billion at 10:51 a.m. New York time, compared with $21 billion yesterday, according to data reported by U.S. banks to the Depository Trust Clearing Corp. and tracked by Bloomberg. Volume in options on the dollar-yen exchange rate amounted to $2.8 billion, the largest share of trades at 23 percent. Euro- Dollar options were the second most actively traded, at $2.4 billion, or 20 percent.
Dollar-yen options trading was 77 percent below the average for the past five Thursdays at a similar time in the day, and euro-dollar options trading was 46 percent below, according to Bloomberg analysis.
The ECB lowered its [Dear Guest/Member you can't see link before click here to register] by a quarter percentage point to 0.5 percent as predicted by 45 of 70 economists in a Bloomberg News survey. The central bank reduced its marginal lending rate, which banks use for overnight credit, to 1 percent from 1.5 percent. It kept its deposit rate, which banks pay to park cash in the central bank, at zero.
“We will look at all the incoming data and stand ready to act if needed,” Draghi said at a press conference in Bratislava, Slovakia, where the ECB met.
‘Technically Ready’
Asked if further action could include taking the deposit rate into Negative territory from zero, he said the central bank is “technically ready” and that “we will look at this with an Open mind.”
Draghi said the ECB will continue to lend banks as much money as they need at least until the middle of 2014.
“It is the reference to the ECB being technically ready for Negative deposit rates that is now putting the Euro under pressure,” said Ian Stannard, head of European currency strategy at Morgan Stanley in [Dear Guest/Member you can't see link before click here to register]. “The market is likely to take this as a signal that the ECB has more room if required, hence putting the Euro under pressure.”
A gauge of [Dear Guest/Member you can't see link before click here to register] in the Euro area declined to 46.7 last month from 46.8 in March, London-based Markit Economics said today before the ECB decision. The reading has been below 50, which indicates contraction, for 21 consecutive months.
The Dollar strengthened for the first time in six days against the yen after the U.S. Labor Department said applications for unemployment insurance payments fell by 18,000 to 324,000 in the week ended April 27, the fewest since January 2008. Economists forecast 345,000 claims, according to the median estimate in a Bloomberg News survey.
Chinese Manufacturing
[Dear Guest/Member you can't see link before click here to register]’s currency rose earlier against most major peers as data showed [Dear Guest/Member you can't see link before click here to register]’s factory output slowed, spurring demand for the relative safety of the yen. HSBC Holdings Plc and Markit Economics said their [Dear Guest/Member you can't see link before click here to register] of Chinese manufacturing fell to 50.4 in April from 51.6 the previous month.
The yen has dropped 3.2 percent in the past three months, according to Bloomberg Correlation-Weighted Indexes that track 10 developed-market currencies. The Dollar gained 2.9 percent and the Euro fell 1.9 percent.
The [Dear Guest/Member you can't see link before click here to register], which Intercontinental Exchange Inc. uses to track the greenback against the currencies of six U.S. trading partners, rallied 0.9 percent to 82.208 after dropping to 81.331 yesterday, the lowest since Feb. 25.