Euro Falls After ECB Protocol, US Dollar is Supported by Easing Geopolitical Tension

Market Reviews

US dollar strengthened against euro, Japanese yen and Swiss franc, but still, it is staying in a tight range against the British pound, Canadian and Australian Dollars. US President Donald Trump backed down from his initial tough stance on Syria, and it’s now unsure when he will order firing of missiles over it. Global stocks reacted positively on easing of geopolitical tension with DAX surged by 0.55%, and the CAC up 0.23%. US stock markets are awaited to open with gains too.

Euro drops sharply as markets were disappointed by ECB minutes for March monetary policy meeting. The minutes of the European Central Bank last month's meeting expressed concern over the risk of a full-fledged trade war with the United States and fretted over the potentially harmful impact of the euro's strength.

With the euro zone economy growing for five straight years, ECB's policymakers are now debating how to prepare investors for normalizing policy a decade after the global financial crisis sent central banks into crisis mode. While the euro's firming in recent months, partly due to fears over US protectionism, has not significantly curtailed demand, policymakers called the exchange rate a "significant source" of uncertainty with some predicting a more negative impact on inflation.

Eurozone industrial production, which accounts for some 20% of the gross domestic product, was much weaker than expected in February, pointing to slower economic growth in the first quarter and no quick policy tightening from the European Central Bank. The Eurostat said industrial production fell 0.8% month-on-month for a 2.9% year-on-year rise. Economists had expected a 0.1% month-on-month increase and a 3.8% annual gain.

The number of people who filed for unemployment assistance in the US fell less than expected last week. The US Labor Department reported that initial jobless claims decreased by 9.000 to 233.000. Analysts had expected claims to drop to 231.000 last week. Also from the US, import price index increased 0.0% mom in March.