"But the real driver has been the parlous performance of the U.S. dollar despite rising USA rates and solid United States growth".
Mr. Draghi spoke glowingly of the eurozone economy Thursday, describing a robust expansion that "accelerated more than expected in the second half of 2017". During the press conference, ECB President Draghi carried on with dovish tone, noting in particular that domestic inflationary pressures continue to be weak. Ahead of the meeting, there had been speculation that President Draghi might express concern about the recent rise in the euro and the impact that might have on their inflation projections. A year ago the major strengthening of the Euro came off the back of the central bank declaring their appetite for change however the changes didn't happen.
"But the European Central Bank is confident that the stronger economy will also lead to a lasting rise in inflation in the foreseeable future" that will dispel its policy woes, he added. "Put simply, Draghi is warning that foreign countries could follow the U.S.in a race to the bottom if the US tries to devalue the dollar".
Recent UK wage growth and employment figures have shown rising earnings and more people in work, raising hopes for one or more interest rate hikes this year. The German 10-year Bund yield rose as high as 0.579 per cent and was set for its biggest one-day rise in two weeks. Moreover, analysts don't predict any hike in rates, which are now negative on deposits.
US benchmark 10-year notes last rose 9/32 in price to yield 2.6207 percent, from 2.654 percent late Wednesday. The EUR is the weakest in the snapshot but the pesky-bearish dollar is right on it's heels for the weakest of the majors.
This does not bode overly well for the outlook going forward, adding to the bearishness of the Canadian Dollar (CAD) on Thursday.
It is interesting how the bullish sentiment towards the European economy and growing expectations of QE ending before year-end, have elevated the Euro to levels not seen in more than three years.
The news, contained in the weekly USA government energy inventories report, signalled strengthening demand for crude in top consumer the United States. This has contributed to the euro performing at 1.234 against the dollar, its best performance since end 2014. Economists had expected the index to rise by 0.5% compared to the 0.4% increase originally reported for the previous month. The NZD fell more than a cent against the Dollars immediately after the release, but it has recovered some ground since then amid broader USD weakness.
Shares in 3M have hit an all-time high today after the company posted EPS of $2.10, which easily topped the forecasts of $2.03. The BoJ releases the minutes to their last meeting.