Euro hits 32-month high against dollar

LONDON (AFP) — The euro Friday reached the highest level against the dollar since the start of 2015 as traders bet on the European Central Bank winding in its huge stimulus program.

Comments by ECB President Mario Draghi sent the euro surging Friday to $1.2092 — the highest point since January 2015.

Gold meanwhile hit a year-high at $1,357.64 an ounce as the dollar weakened and traders continued to pile into so-called haven investments, including also the yen and Swiss franc, as jitters over North Korea persist.

Stocks markets, for their part, were mostly mixed to slightly lower, especially after Wall Street opened in the red. “Equity traders have donned their risk-off hats into the weekend,” said Accendo Markets analyst Mike van Dulken.

“This is due to a combination of inclement weather, geopolitical concerns, mixed macro data (China) and yesterday’s ECB hints about QE tapering that sent the euro to 32-month highs,” the expert said.

David Madden, analyst at CMC Markets UK, said “the bullish sentiment surrounding the single currency is showing no signs of slowing,” adding that the next regular ECB meeting “could give us detail about trimming the bond-buying scheme... keeping the euro in demand.”

While Draghi did not openly say that the European Central Bank would begin to cut back on the pro- gram, his comments — and his lack of concern about the strong euro — were taken as a nod that the so-called “tapering” would begin soon.

The remarks came as figures showed the eurozone economy continued to improve in the second quarter.

“Growth at these levels does not warrant the continuation of the ECB’s bond-buying program,” said Greg McKenna, market strategist at AxiTrader.

“The ECB knows it and the market knows it. That’s what is driving the euro higher and it’s what is complicating the decision for the ECB on the when and how” of curbing the stimulus.

The dollar was meanwhile under pressure also from concerns about the impact of Hurricane Irma, which is about to strike Florida this weekend, while the chances of U.S. President Donald Trump pushing through his market-friendly economic agenda are narrowing, traders said.

The greenback fell below 108 yen to the lowest level since November.

North Korea tensions, which fuelled a global sell-off of equities after Pyongyang tested what it said was a hydrogen bomb on Sunday, were eased a little by Trump’s remarks that a U.S. military strike was “not inevitable.”

However, with world powers struggling to agree on a way to address the crisis, markets remain on edge, with many observers fearing North Korea will conduct another missile test on Saturday.