Dollar Gains to Almost 9-Month High Versus Euro on Policy

09:43 PM @ Thursday - 07 August, 2014
The dollar strengthened to an almost nine-month high against the euro after European Central Bank President Mario Draghi signaled monetary policy will diverge from the U.S. for an extended period of time.

The U.S. currency rose against the majority of its 16 main peers as unemployment claims dropped, pushing the average over the past month to an eight-year low. Russia’s ruble declined to a three-month low as political tension in Ukraine deepened. Australia’s dollar fell by the most in a month against its U.S. counterpart as traders revived bets the nation’s central bank will cut interest rates after unemployment jumped.

“He’s mentioned a few times the divergence in monetary policies -- in a way, he’s trying to send the euro lower, he just wants to remind the market fundamentals are not supporting the euro,” Charles St-Arnaud, London-based senior economist at Nomura Securities International Inc., said of Draghi “The initial jobless claims numbers were excellent. They’re back to pre-crisis levels.”

The dollar advanced 0.3 percent to $1.3340 per euro at 10:09 a.m. New York time after touching $1.3333 yesterday, the strongest since Nov. 8. The euro was little changed at 136.58 yen. Japan’s currency weakened 0.3 percent to 102.37 per dollar.

The ruble fell for a sixth day against the central bank’s target basket of dollars and euros, sliding 0.2 percent to 41.7639 and touching 41.9409, lowest since May 6. The Aussie fell 0.9 percent to 92.70 U.S. cents after plunging 1 percent, the most since July 3.

St-Arnaud recommends investors buy the dollar against the euro, Aussie and New Zealand dollar.
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