The euro’s nine-month tumble is history.
The 19-nation currency posted its biggest weekly gain versus the US dollar in six weeks on signs the European Central Bank’s (ECB) stimulus plan has the region’s economy ready to generate stronger growth and inflation. Meanwhile, US first-quarter economic growth was slower than forecast, fanning speculation the Federal Reserve would not rush to raise interest rates.
“The euro has looked heavily oversold for a while,” Shaun Osborne, head of global foreign-exchange strategy at Toronto-Dominion Bank, said by e-mail. “It has brought a much needed correction to the market.”
The euro gained 3 percent to US$1.1199 this week in New York, staging a six-day climb that was the longest rally in more than a year. The 4.6 percent rise last month was the first since June last year and largest since September 2010.
The shared currency strengthened 4 percent to ￥134.58 this week, the biggest gain in two years. Japan’s currency fell 1 percent to ￥120.15 per US dollar.
Hedge funds and money managers reduced net bearish bets for the euro to weaken against the US dollar again after reaching a record on March 31, according to Commodity Futures Trading Commission data. Futures positions betting on a weaker euro were at 197,766 contracts as of Tuesday, compared with 214,645 a week earlier.
Euro-area consumer prices ended a four-month streak of declines last month after falling 0.1 percent in March. The ECB seeks to foster inflation close to 2 percent.
The signs of rising prices reflected results for the central bank’s bond-buying program, sending the euro higher and helping fuel a rout in euro-area bond markets.
Government bond yields moved higher in Germany and other nations, adding to the allure of euro-denominated assets.
Meanwhile, sterling climbed 3.6 percent last month against the US currency, the most since September 2013, even as opinion polls continued to point to no overall winner in Britain’s election on Thursday.
Friday’s drop left the pound 0.4 percent lower this week at US$1.5135, as of 5pm in London.
Sterling weakened 3.2 percent to ￡0.7396 per euro this week as the common currency rallied against all of its 16 major peers.
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