European Central Bank President Mario Draghi’s speech during a conference in Portugal rallied the euro on Wednesday, pushing the currency to a one-year high. EUR/USD advanced 0.20% to 1.1363 following the speech.
Draghi’s remarks gave investors confidence that the ECB will begin scaling back their stimulus measures that have been in place for nearly a decade.
Deutsche Bank also helped support the euro, with calls to end the rally for the greenback. Analyst George Saravelos previously expected the euro to fall to $0.85, but has since revised his forecast to $1.03 to $1.16 following Draghi’s comments.
The euro rallied on Tuesday rising 1.39% against the greenback marking the largest rise in the currency pairing since June 2016.
Mark Carney, Bank of England Governor, boosted the sterling today pushing the pound past the $1.29 level against the dollar. GBP/USD advanced 0.97% to hit nearly $1.30 against the dollar after Carney changed his guidance on interest rates.
Carney signaled a possible removal of some stimulus measures moving forward.
The comments come after the BoE was split, with a 5-3 vote to raise interest rates this month. Carney voted to keep rates unchanged at record lows of 0.25%.
“Some removal of monetary stimulus is likely to become necessary if the trade-off facing the MPC continues to lessen and the policy decision accordingly becomes more conventional,” stated Carney at the Portugal ECB forum.
The U.S. dollar index slipped 0.31% against a basket of major currencies, as Republican leaders postponed a vote on the country’s healthcare reform. The vote will be postponed until after the July 4 recess in an effort to gain more support for the bill.
Investors fear that the Trump administration will struggle to push through reforms and policies following the postponement. The administration has stated that the healthcare reform needs to be passed before discussing tax cuts and fiscal stimulus plans.
USD/JPY is down 0.17% and the USD/CAD is down 0.96% on the day.