“As the economy continues to recover, a constant policy stance will become more accommodative, and the central bank can accompany the recovery by adjusting the parameters of its policy instruments – not in order to tighten the policy stance, but to keep it broadly unchanged”, Draghi told an ECB conference in Sintra, Portugal. “Unless an unexpected shock materialises, a formal tapering announcement is likely to come at the European Central Bank monetary policy meeting scheduled on 7 September”.
The dollar index fell 0.7 percent, with the euro up 1.03 percent to $1.1294.
The dollar also fell against the yen by 0.3% having increased earlier to a high of five weeks during Asian trading.
Investors were otherwise largely focused on a series of speeches by global central bank officials on Tuesday, including remarks from Mr. Draghi and Federal Reserve Chairwoman Janet Yellen.
Also due to speak on Tuesday was Fed Vice Chair Stanley Fischer. Shares of oil and gas producers rose, however, offsetting some of the declines elsewhere as US crude oil climbed 1% to $43.80 a barrel.
“In the third quarter we should draw (down stocks), but we are unsure about the fourth quarter as USA production is likely to have a year-end spurt”, Taylor said.
Wall Street staged a modest recovery approaching midday in NY, reversing an earlier weak trend.
The pan-European FTSEurofirst 300 index lost 0.70 percent and MSCI‘s gauge of stocks across the globe shed 0.02 percent. Wall Street looked poised for a slow start, with Dow futures down 0.1 percent and S&P futures 0.2 percent lower. Korea’s Kospi edged up 0.1% to another record close, while Japan’s Nikkei added 0.4% following an earlier decline in the yen against the dollar.
“He surprised the market with that upbeat stance”, said Tom di Galoma, a managing director at Seaport Global in NY.
This followed Yellen’s increasingly hawkish tone and the bank’s plan to wind down its bond-buying programme to suck excess cash out of financial markets.
The increase in European yields also put some downward pressure on Treasuries with USA 10-year rates edging above 2.16% which put some upward pressure on USD/JPY with a move to the 111.80 area with a firm tone in oil prices also providing support. That was the flattest level since late 2007. Shares of Alphabet dropped 1.1% after the European Union’s antitrust regulator fined Google EUR2.42 billion ($2.71 billion) for favoring its own comparison-shopping service in search results.
Bank shares advanced in Europe, however, with Italian lenders adding 1.2% after Italian authorities said Sunday they were prepared to spend as much as EUR17 billion ($19.03 billion) as part of the shutdown of two regional banks. The euro jumped above $1.1250, its highest level in almost two weeks. US gold futures gained 0.09 percent to $1,247.50 an ounce.