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FOREX-Euro rebounds as ECB's Draghi makes no mention of imminent QE
October 2, 2014 / 2:00 PM / in 3 years

FOREX-Euro rebounds as ECB's Draghi makes no mention of imminent QE

(Recasts to add ECB’s Draghi’s comment and U.S. data)

* ECB’s Draghi give no hint of imminent QE

* ECB keeps rates unchanged as expected

* U.S. jobless claims better than expected

By Gertrude Chavez-Dreyfuss

NEW YORK, Oct 2 (Reuters) - The euro gained against the dollar on Thursday for the first time in eight days, after European Central Bank President Mario Draghi gave no indication of an imminent stimulus program through the purchase of sovereign bonds.

“The euro rose not because of what Draghi said, but what he didn’t say,” said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington. “We haven’t heard any meaningful language regarding an increase in the scope of assets to be purchased, in other words, outright quantitative easing.”

In his post-meeting news conference after the ECB left interest rates unchanged, Draghi acknowledged the market’s desire for numbers on the bank’s bond purchase program, but said its “ultimate and only mandate” is to bring inflation back to a level that is close to but below 2 percent.

“I understand your desire to have very precise figures for everything. That makes life perhaps easier,” Draghi said. “But I have to say that I wouldn’t want to emphasise the balance sheet size per se. That’s very important, but it’s only an instrument.”

He did indicate that the ECB’s bond purchase plan will have a sizable impact on its balance sheet, adding that he saw increasing divergence in monetary policy between the ECB and the U.S. Federal Reserve.

“The central bank chief’s remarks appeared designed to put fresh downward pressure on the euro’s exchange rate.” said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington.

The euro rose as high as $1.2691 in the aftermath of Draghi’s remarks and was last at $1.2676, up 0.4 percent. That was the euro’s first gain since Sept. 22.

Meanwhile, the dollar fell 0.3 percent against the yen to 108.62 after weak global manufacturing data and a U.S. Ebola health scare sent investors in search of safer assets. It hit a nine-day low versus the yen on risk aversion.

The greenback did trim losses after the initial U.S. weekly jobless claims came in better than expected.

Initial claims for state unemployment benefits dropped 8,000 to a seasonally adjusted 287,000 in the week ended Sept. 27, the Labor Department said on Thursday. Economists polled by Reuters had forecast claims rising to 297,000 last week.

The dollar index fell about 0.4 percent to 85.665, pulling away from a four-year high of 86.218 touched on Tuesday as investors took profits after the greenback’s recent rally. The index has notched a record-breaking 11 straight weeks of gains and posted the best quarterly rise in six years. (Reporting by Gertrude Chavez-Dreyfuss; Editing by Meredith Mazzilli)

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