Euro Drifts in Low Volume, Draghi Comments; Kiwi Gains on Data
- Bundesbank’s Weidmann: Germany unlikely to lose AAA rating
- Draghi: ECB bond purchases not infinite or eternal
- Draghi: important to not destroy ECB’s credibility, independence
- Draghi: ECB can’t do everything to help cap yields
- New Zealand Services Index hits 21 month high
The Euro and other European currencies drifted lower this morning against the US dollar in low liquidity trading. Although there were no major developments over the weekend affecting the 17-nation currency, European Central Bank President Mario Draghi indicated in an interview with the Financial Times that the ECB may have limited scope in targeting yields of particular member states. The central bank’s recent purchases of Spanish and Italian bonds in order to cap yields have been met with criticism from members of the German government and the Bundesbank, and it seems president Draghi is bowing to pressure to stop purchases and maintaining the independence of the bank.
The New Zealand Dollar led gainers in early trading on better than expected service sector data. The New Zealand Performance of Services Index for November rose to 56.6, beating October’s report of 51.0, revised up from 50.6, a new 21 month record. Today’s data indicating a still robust domestic services economy despite a slowing China cutting demand for NZ products hints against the RBNZ possibly following the RBA and ECB in easing monetary policy as the global economy slows again.
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