Dollar gains on ECB stimulus, stocks dip

May 10, 2014 - 12:05:39 am

NEW YORK: The US dollar strengthened against the euro and Japanese yen yesterday after the European Central Bank signalled it could deliver fresh monetary stimulus next month, while global equity markets eased after hitting record peaks this week.

Lower-rated eurozone bonds rallied after ECB President Mario Draghi gave his clearest signal yet that policy-makers might act in June to stem slowing inflation and bolster a fragile economic recovery in the single currency bloc.

Italian and Spanish borrowing costs fell to record lows after the ECB raised the prospect that it could embark on an asset purchase programme if inflation remained persistently low.

Spain and Italy, which two years ago were at the forefront of the euro zone debt crisis, badly need the recovery to gain traction to curb high debt levels.

The euro fell 0.53 percent to 1.3767 against the dollar. The dollar basket rose 0.58 percent and the dollar gained 0.11 percent against the yen to 101.76.

John Doyle, currency strategist at Tempus Inc in Washington, said the euro’s decline from Thursday has eased a bit and that Draghi in the past has tried to talk down the euro’s strength.

A measure of global equity performance, MSCI’s all-country world index, fell 0.48 percent after advancing to its highest level since November 2007 on Thursday.

In Europe, FTSEurofirst 300 index slipped 0.4 percent to 1,353.43. On Wall Street, the major stock indices also declined, trading near their level at the beginning of the year. The benchmark S&P 500 is up a bit more than 1 percent for the year, and has traded within a rough 35-point range for two months.