Dollar stands tall after dovish Draghi pressures euro

usdollarTOKYO: The dollar stood tall in Asian trading on Friday, on track for a weekly gain against a basket of currencies, as the euro wallowed close to four-month lows after the European Central Bank quashed any speculation of tapering its stimulus.

The dollar index, which gauges the greenback against six major rivals, was up 0.1 percent at 98.369, up 0.4 percent for the week and not far from its overnight high of 98.404, its loftiest peak since March 10.

The euro was slightly lower at $1.0925, poised to shed 0.4 percent for the week after plumbing $1.0914 on Thursday, its lowest since June 24.

ECB President Mario Draghi left the door open to a wide range of policy options and emphasized that a long-awaited rise in inflation is predicated on “very substantial” monetary accommodation – giving markets no reason to believe the central bank was ready to talk about tapering its 1.7 trillion euro ($1.86 trillion) asset-buying program.

“We expect further discussion of these issues at the December meeting, where a fuller set of forecasts will be produced. For now, markets have been sent a dovish signal relative to earlier speculation,” strategists at Rabobank said.

US data on Thursday, by contrast, showed that US home resales surged in September after two straight months of declines, which gave investors more reason to bet that the US Federal Reserve would hike interest rates as early as its Dec. 13-14 meeting.

Separate data showed that first-time filings for unemployment benefits rose more than expected to 260,000 last week, but the trend suggests the labor market remains strong.

The dollar added 0.2 percent to 104.13 yen, but was still down 0.1 percent for the week.

Recently battered sterling was steady at $1.2252, on track to gain 0.5 percent for the week.

European Council chief Donald Tusk said EU leaders would not engage in negotiations on Britain’s exit from the bloc at Prime Minister Theresa May’s first summit in Brussels, ruling out any Brexit negotiations until May formally launches the exit process.