FX Roundup: Euro falls on Draghi comments

The euro saw a drop of over 1% in late afternoon trading on Monday, after European Central Bank President Mario Draghi called for fiscal stimulus, where possible, and structural reforms to be added to the Eurozone policy-mix.

In his testimony before the European parliament, Draghi said, “Other policies should help to put the euro area economy on firmer grounds. It is becoming clearer and clearer that fiscal policies should support the economic recovery through public investment and lower taxation.

“In addition, the on-going cyclical recovery should be supported by effective structural policies. Compliance with the rules of the Stability and Growth Pact remains essential to maintain confidence in the fiscal framework.”

At 1549 GMT, the euro was down 1.03% against the dollar exchanging at $1.1141, while the pound was 0.39% lower at $1.4447. The greenback also resumed its uptick against the yen, gaining 1.07% to JPY114.46

Kit Juckes, head of forex at Societe Generale, said, “The net long speculative dollar position on the US futures market, according to CFTC data, is almost as small as it was in October before Mario Draghi intervened verbally to stop the Euro's advance. I suspect we're nearing the end of the broader dollar correction even if there are a few more twists and turns to get through.”

Elsewhere, commodity linked currencies saw a relatively stronger trading session in Europe with US markets closed for the President's day holiday. The Australian dollar rose 0.42% against the greenback exchanging at US$0.7142, while the New Zealand dollar rose 0.38% exchanging at US$0.6652.

The greenback fell 0.17% against the Canadian dollar exchanging at CAD$1.3827.

In Latin America, the greenback also fell against major regional crosses, including the Chilean (down 0.69%), Colombian (broadly flat), Mexican (down 0.39%) pesos and the Brazilian real (0.31%).