The euro declined to a three-week low against the U.S. dollar. It also fell against Japanese Yen yesterday (Wednesday 26 June) following the European Central Bank’s President Mario Draghi’s comments emphasizing the risks to euro zone growth. He stated that monetary policy will stay accommodative.
Final data resulted in the euro paring losses against the dollar. The data showed that the U.S. growth was more moderate than estimated in the first quarter. U.S. growth was restrained due to moderate consumer spending, weak business investment and a decline in the amount of exports.
Yesterday, 26 June, Draghi commented that the euro zone economic recovery will be slow and fragile. The previous day he had also remarked that the ECB has not reached the point where it can discard its accommodative monetary policy.
The Federal Reserve however contrastingly expects to slow down its bond purchases sooner than other central banks.
Spreads between 10-year U.S. Treasury bonds and German bund yields have widened to a record high since April 2010 in favor of dollar assets.
Yesterday late afternoon, the euro went down by 0.6 percent to $1.3008. Its lowest was $1.2983 on 3 June, which is not far off than yesterday.
According to the managing director at BK Asset Management, Kathy Lien, a large part of the sell-off in euro/dollar from $1.34 on 19 June down to $1.2985 yesterday was fuelled by re-pricing of FOMC expectations.
The euro went down against the Yen too by 0.6 percent to 127.18 yen, following a one-week low at 126.53 yen in the previous week.