Euro falls after weekend's dovish remarks by ECB president Draghi and other policymakers: Apr 14, 2014

Market Review - 14/04/2014    22:48GMT

Euro falls after weekend's dovish remarks by ECB president Draghi and other policymakers

The single currency gaped lower at New Zealand open on Monday after European Central Bank President Mario Draghi said on Saturday that further appreciation in the currency would trigger more monetary stimulus. Euro later fell to an intra-day low at 1.3808 after U.S. retail sales rose in March by the most since September 2012.

Draghi said on April 12 that "I've always said that the exchange rate is not a policy target, but it’s important for price stability and growth. And now, what has happened over the last few months, it’s become more and more important for price stability." Draghi's statement was also echoed by other ECB officials in weekend meetings of the International Monetary Fund and World Bank in Washington.

U.S. retail sales in March increased 1.1%, much stronger than economists' forecast of 0.9% rise, following a 0.7 percent gain in February. Sales excluding receipts at gas stations were the strongest in four years.

U.S. dollar bounced briefly to 101.71 against the Japanese yen in New Zealand morning on Monday and then ratcheted lower to 101.42 in Tokyo, however, short-covering above last Friday's low at 101.32 lifted the pair and price rebounded to 102.02 on dollar's broad-based strength due to the release of robust U.S. retail sales data before retreating in late New York as U.S. equities pared some of early gains.

The British pound also opened lower to 1.6709 in New Zealand morning on Monday in tandem with euro. Cable weakened further to 1.6697 after the release of stronger-than-expected U.S. retail sales data before staging a brief bounce to around 1.6743.

In other news, German FinMin Schaeuble said 'Ukraine is the greatest geo-political risk facing the economy by a great margin; further euro strengthening could have negative effect on economy; Draghi made a convincing case at IMF meeting that Europe's low inflation rates hold no deflation fears; no signs at all of deflation spiral in Europe.' ECB's Noyer said 'euro appreciation is a drag on ECB's price stability objective; ECB can buy all sorts of securities if it wants to embark on QE, including both private and sovereign.'

After Monday's choppy moves, investors are waiting for the speeches from Bank of Japan Governor Haruhiko Kuroda and Fed's Chair Yellen respectively and also the release of China's gross domestic product data on Wednesday. China's GDP is expected to come in at 7.3% last quarter from a year earlier, the least since 2009.

Tuesday will see the release of Australia April minutes, U.K. BRC sales like for like, CPI, RPI, PPI, ONS house price, Germany Zew current situation, survey expectation, EU Zew survey expectation, trade balance, U.S. Empire manufacturing, CPI, Redbook retail sales, Net long term TIC, Total Net TIC, NAHB housing market index and Canada existing home sales.