Exporters relieved as euro falls to lowest level since March

The euro has fallen to its lowest since March after European Central Bank president Mario Draghi signalled quantitative easing would not come to an "abrupt" end.

The move comes as some relief to Irish exporters, with sterling climbing this morning to 88.9p sterling, having breached 90p earlier this week.

The euro fell after Mr Draghi said on Thursday that neither tapering nor an extension of bond-buying stimulus were discussed at a monetary meeting that ended that day. That leaves traders waiting until at least December for news about policy changes.

“ It’s a double whammy from the ECB meeting,” said Matt Simpson, a senior market analyst at ThinkMarkets in Singapore.

“Draghi didn’t talk tapering and suggested easing in December. That’s got traders pricing in a weaker euro.”

The euro dropped 0.4 per cent to $1.088 this morning, the weakest level since March 10th.

Federal Reserve

Futures traders are pricing about a 68 per cent probability the US Federal Reserve will raise interest rates by December, up from 66 per cent at the end of last week.

In the press conference after Thursday’s ECB meeting, Mr Draghi said the ECB would not end its massive bond-buying programme abruptly.

This has upped speculation in the market that the programme would be extended beyond March 2017, its current end date. The ECB is expected to give clearer indications after its meeting in early December about what it will do.

The US dollar was on course for its third consecutive week of gains against the basket of currencies used to measure its broader strength on Friday, driven by hardening expectations of a rise in interest rates in December.

Comments by New York Fed president William Dudley and Donald Trump’s failure to register a big win in Wednesday’s presidential debate have hardened that view that a rate rise is on the way, fuelling another surge for the dollar.

– (Bloomberg, Reuters)