Dollar marches to four-year high; euro, oil wilt

Friday, 26 September 2014 11:37 - - {{hitsCtrl.values.hits}}

Reuters: The dollar hit a four-year high and oil hovered near a two-year low on Thursday, as investors wagered the United States will be one of the few economies healthy enough to wean itself off of central bank aid in the near future.

Share markets in Europe started with small gains as Britain and France debated joining U.S.-led military action against Islamist militants and as the euro sank to a 22-month low on bets the ECB will need a major stimulus effort. Its President Mario Draghi reiterated in a newspaper interview again on Thursday there was more the ECB can do if necessary. His words came as the central bank released its latest batch of lending data that, like it has for months, showed there is little in the way of demand for credit in the euro zone’s still-struggling economy. “ECB President Mario Draghi continues to beat the QE (quantitative easing) drums ... so hardly surprising that euro/dollar is trading at even lower levels this morning,” said Esther Reichelt, a currency strategist at Commerzbank,” Britain’s FTSE, Germany’s DAX and France’s CAX rose 0.1-0.3% to put the region in the black after a choppy few days, but it was the currency market where most of action was. With the ECB data casting a shadow, the euro fell to $1.27305 its lowest since November 2012 while the dollar, which had its own momentum following some strong U.S. housing data on Wednesday, powered up 0.35% to a fresh 4-year high against a basket of currencies. A key factor was widening yield differentials between U.S. 10-year government bonds and their German counterparts. The difference is the biggest in nearly 15 years and is driving more investors to buy the dollar. The greenback was also within touching distance of its recent six-year high against the yen and was exerting broad downward pressure on commodities markets which are largely priced in dollars.