Euro on the rise

January 12, 2018

The dollar slumped to a more than three-year low against the euro on Friday, as the common currency extended its gains on hopes that European Central Bank policymakers are preparing to reduce their vast monetary stimulus program.

The euro was up 1.23 percent to $1.2179, on pace for its biggest single-day percentage gain against the greenback in about two months.

On Thursday, the euro rose 0.72 percent against the dollar after ECB policymakers said in minutes of the bank's December meeting that they could revisit their communication stance in early 2018.

 

Investors took that as a signal that the ECB will wind down its 2.55 trillion euro ($3.10 trillion) bond purchase scheme this year if Europe's economy continues to hum along.

"The latest ECB comments were a bit on the hawkish side, so that's giving more life to the euro," Minh Trang, senior currency trader at Silicon Valley Bank in Santa Clara, California.

The euro found further support after Chancellor Angela Merkel struck a deal with Social Democrat (SPD) rivals on Friday to open government coalition talks, easing months of uncertainty that has undermined Germany's global role and raised questions about her political future.

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