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Euro rises on bets for ECB tightening

Euro rises on bets for ECB tightening

HONG KONG, Aug 28: The euro held its gains on Monday as traders bet that the European Central Bank would start to wind down its crisis-era stimulus programme, while lower expectations for further tightening in the United States weighed on the dollar, reports AFP. While ECB boss Mario Draghi made no mention of the bank’s plans for its bond-buying scheme in a much-anticipated speech Friday, analysts said his optimism about the eurozone economy was enough to fuel euro buying. Janet Yellen’s decision not to discuss the Federal Reserve’s plans for future interest rate rises was also seen as an indication of the US central bank’s reticence to announce any more increases. The single currency bought $1.1933, its highest since January 2015, while it was also around eight-year highs against the pound. The dollar continued to struggle against the yen. While the ECB is widely expected soon to begin tapering its stimulus, its policymakers are concerned about the impact of a strong currency on the bloc’s exports. “Mario Draghi will be tearing his hair out,” said Greg McKenna, chief market strategist at AxiTrader. “If saying nothing can drive the euro to its highest level since January 2015 then the ECB president and his colleagues will be genuinely worried about the impact an announcement to further reduce its QE programme could have on the single currency.” On equity markets Hong Kong extended its winning run into a fifth straight day to reach its highest level since summer 2015. But Hong Kong-listed shares in Wanda Hotel Development Co plunged almost 10 percent at one point even though the firm denied reports that chairman Wang Jianlin had been barred from leaving China and detained for hours. It pared some of the losses but was still down almost seven percent in late trade. Shanghai added 0.9 percent but Tokyo ended flat, Sydney shed 0.6 percent and Seoul was off 0.4 percent. In early European trade Paris and Frankfurt each dipped 0.5 percent. London was closed for a holiday. Tech giant Samsung sank almost two percent in Seoul, extending Friday’s losses after Lee Jae-Yong, de facto head of the world’s biggest smartphone maker, was jailed for five years for bribing South Korea’s ousted president and other offences. The main US oil contract West Texas Intermediate edged down in early trade after surging at the end of last week, as energy companies were forced to shut down some of their operations because of deadly Hurricane Harvey. “Some offshore oil and gas operators evacuated platforms and rigs, although offshore production was picking up a bit Sunday, while onshore operators were shutting in what may amount to hundreds of wells in the Eagle Ford Shale in South Texas,” global energy information provider S&P Global Platts said. Key figures around 0720 GMT: Tokyo - Nikkei 225: FLAT at 19,499.90 (close), Hong Kong - Hang Seng: UP 0.1 percent at 27,885.43, Shanghai - Composite: UP 0.9 percent at 3,362.82 (close), London - FTSE 100: Closed for public holiday, Euro/dollar: UP at $1.1933 from $1.1926 at 2050 GMT, Pound/dollar: UP at $1.2897 from $1.2876, Dollar/yen: DOWN at 109.07 yen from 109.30 yen, Pound/euro: UP at 1.0807 euros from 1.0801 euros, Oil - West Texas Intermediate: DOWN 19 cents at $47.68 per barrel, Oil - Brent North Sea: UP 12 cents at $52.53 per barrel, New York - Dow: UP 0.1 percent at 21,813.67. Saudi Arabia expected its Hajj revenues to exceed 4.2 billion U.S. dollars for the current season, Al Sharq Al Awsat local newspaper reported on Monday, reports Xinhua. A local study highlighted that the revenues are expected to jump to 5.6 billion dollars in five years due to the ongoing increase in the expenditures of pilgrims. The study recommended benefiting from the Hajj season by attracting foreign investments. It also highlighted the importance to consider the season as a tourism industry with respect to its religious aspects. Pilgrims mainly spend on accommodation, transportation, food and gifts.

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