WASHINGTON (AFP) – The dollar racked up solid gains against the euro for the second straight day Friday after Mario Draghi said the European Central Bank was ready to ease monetary policy soon.
The dollar was up about two cents, to $1.3758 per euro, since Draghi’s statement after the close of an ECB policy meeting on Thursday.
In a surprise departure from the bank’s previous policy of never pre-committing on interest rate moves, Draghi said the monetary policy makers were now sufficiently concerned to take more action.
The governing council was “dissatisfied” with the current path of inflation and was “not prepared to accept it as a fact of nature,” Draghi said.
As a result, the governing council “is comfortable with acting next time,” he said.
But he added that “we want to see the staff’s projections that will come up in early June.”
A relatively buoyant report on the economy by Federal Reserve Chair Janet Yellen during the week also continued to support the dollar, analysts said.
Boris Schlossberg of BK Asset Management said he suspected the dollar’s turn upward was more than a momentary shift.
“Even with a dovish Fed and a very low yield US bond market… the latest signal by the ECB would create a more negative interest rate differential dynamic between the euro and the greenback that could finally direct capital flows toward the dollar.”