Euro is losing steam after months of appreciation that highlighted the differences in monetary policy of ECB and the rest of its major peers. The currency is trading at the lowest level in nine months as investors leave euro assets. Traders think ECB will reaffirm its stance and possibly say more about the incoming easing drive with the asset purchases that are being examined so they are shorting Euro now. El-Erian, the ex-PIMCO chief officer said he expects further loosening from the ECB and sees EUR at $1.30 and below. The pound strengthened against the common currency, and India’s rupee lead the appreciation of emerging market currencies.
EURUSD fell to 1.3422. The low point of $1.3367 was touched on July 30. This was the lowest level since the November 12. The European monetary union currency also lost ground against the Yen, falling 0.1 percent to 137.66 per EUR and the USD also lost against the JPY to 102.57 after a 0.8 percent rally that appreciated the greenback to the April 18 level. Investment bank manager John Waters of BofA said investors should buy the dollar against the yen, with a target of 105 by the end of the year. USD was little measured against the 10 of its biggest peers as measured by the Bloomberg Dollar Spot Index which was at 1020.13. The Index added 0.7 percent last week.
Among the emerging market currencies, the rupee was the biggest gainer following the lower than expected payroll data which weakened the USD on the lower rate outlook. The Indian currency advanced 0.4 percent since then while the closest gainers were Chilean peso and Indonesia’s Rupiah. The Peruvian new sol and Colombian peso lost the most, 0.4 percent. The Index summing the emerging market currencies – Bloomberg-JPMorgan Emerging Markets Currencies Index showed emerging currencies strengthening 0.1 percent to 91.55 for the first time in more than a month.
The pound strengthened after Markit PMI industry beat expectations with 62.4 vs 62. GBP was 0.3 percent stronger against the EUR at 79.59 pence per euro and 0.3 percent stronger against the greenback at $1.6863. The Pound lost 1.8 percent since the beginning of the July when investors figured out the pound may be a bit overvalued as the incoming data failed to meet forecasts. The pound lost the support after it dropped below the 100 days moving average. The rally that started in March 2013 pushed the currency to a six-year high.