Wednesday, July 2, 2014

Euro Drops on Bets ECB Policy Will Weaken Currency

ECB officials led by President Mario Draghi will leave monetary policy unchanged tomorrow, according to analysts in a Bloomberg News survey. The Frankfurt-based central bank unveiled unprecedented stimulus measures at its previous meeting on June 5, including negative deposit rates that tend to weaken a currency. Markit Economics said its construction index, based on a survey of purchasing managers, increased to 62.6 from 60 in May. That’s the highest since February and compares with the forecast for a decline to 59.8. The index has been above the 50 level that indicates expansion for more than a year. An index of housing activity increased to 66.6 in June from 62.7 in May, Markit said. That’s the highest since the gauge rose to 67.3 in January, which was the strongest reading in more than a decade. Commercial building grew the fastest in five months. The euro fell versus the dollar for a second day as investors prepare for speeches from Federal Reserve Chair Janet Yellen and European Central Bank President Mario Draghi. The 18-nation currency fell after French Prime Minister Manuel Valls said in an interview with Les Echos newspaper that the ECB needs to go further to weaken euro. Policy makers meet in Frankfurt tomorrow.


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