Dollar up as euro under pressure

Published: 29 May at 9 AM Tags: Euro, Dollar,

The euro remains under pressure this week after comments on Tuesday that the European Central Bank could push interest rates into negative territory. Christian Noyer, governing council member, said if it becomes necessary then the central bank is prepared for an interest rate cut.

Peter Praet, executive board member, echoed the comment after Joerg Asmussen, fellow executive board member, said the bank would keep in place its policy of quantitative easing for as long as is necessary.

On Tuesday the single currency lost 0.6 per cent to settle at $1.2860. In the US the dollar has strengthened following the publication of positive economic data. Consumer confidence is reportedly at a five-year high and there are indications that the Federal Reserve could start to pull back its policy of monetary stimulus.

An early end to QE would give the greenback an additional boost. A strengthening US dollar has seen the Australian dollar come under pressure. The Aussie has lost 7.7 per cent this month and was last trading at $0.9543.

The Australian currency was hit by an unexpected rate cut at the start of May and growth in the construction sector fell 2 per cent rather than rising by 1 per cent as anticipated.