Dutch election outlook buoys euro

Fringe candidate’s loss bolsters hope for EU unity

The euro stood tall on Thursday after Dutch election exit polls pointed to a comfortable win by the prime minister over his far- right rival, while the dollar wallowed at a one- month low after the Federal Reserve sounded less hawkish than anticipated on future rate rises.

The euro climbed to a five- week high of $ 1.0746 on Thursday, after surging 1.2 percent overnight.

“The euro’s rise was an initial reaction to the Dutch exit polls and the currency could rise further when the European ‘ mother market’ comes into session later in the day,” said Masafumi Yamamoto, chief currency strategist at Mizuho Securities.

“How much further support the euro can garner would depend on how the Dutch vote could now impact the French presidential elections, for example by eroding support for [ Marine] Le Pen. We could see the euro gain further if spreads between French and German government bonds tighten today.”

The dollar index against a basket of major currencies was down 0.2 percent at 100.560.

It slid more than 1 percent the previous day to touch 100.490, its lowest since February 17.

The greenback took a knock after the Fed ended its two- day policy meeting on Wednesday by increasing interest rates as expected but stuck to projections of three total rate hikes in 2017.

Some traders had begun to sus- pect it would raise rates four times this year as the economy builds up steam.

The pound was 0.2 percent lower at $ 1.2267 after jumping 1.1 percent overnight. Sterling managed to pull away from a two- month low of $ 1.2110 struck Tuesday on fears of prolonged political jousting over Brexit terms.

The Swiss franc was steady after gaining about 1 percent against the dollar the previous day.

The Bank of England and the Swiss National Bank are due to make policy decisions later in the day, with both central banks expected to stand pat on monetary policy.