Though Mario Draghi has been adding fuel to existing speculation that the ECB could shift to an even more accommodative stance, the Finance Minister of Germany, Wolfgang Schaeuble, has been downplaying just such a possibility, dismissing the ECB chief’s comments at the Jackson Hole central bankers’ symposium as “over-interpreted” by analysts. Some currency strategists agree with Schaeuble, saying that though they believe that the ECB is general is becoming more dovish it’s not to the extent that the market believes in the wake of the Jackson Hole meeting, and given that they expect to see a bounce in the Euro.
Indeed, the EUR/USD did come off an earlier near yearly low at $1.3151 which struck during the Asian session and was trading at $1.3183 at 9:49 a.m. (BST) in London. The Euro, however, remains under broad pressure, following today’s release of German consumer sentiment which matched the expectations of Germany’s business leaders with a fall; for consumers, that was the first such drop in more than 1½ years, a reflection of growing worries over the effect of Russian sanctions. The EUR/GBP was lower at 0.7945 while the EUR/CAD was trading at C$1.4362, a fresh 9-month trough, and the EUR/AUD was lower at A$1.4109.
Kiwi Gets Boost on Fonterra News
In New Zealand, the Kiwi Dollar edged off a 6-month trough against the U.S. Dollar at $0.8311 after the diary producer Fonterra announced that it had entered into a partnership to sell milk and other dairy products in China. Given that dairy is the country’s largest export, that news helped to lift the Kiwi Dollar which gained more than 0.5% to trade at $0.8377.