ECONOMY

Euro erases gains as ECB seen moving to cut rate in December

euro-erases-gains-as-ecb-seen-moving-to-cut-rate-in-december

The euro erased an advance versus the dollar amid speculation the European Central Bank is moving closer toward cutting its deposit rate when it meets next month.

The 19-nation currency traded near its weakest level since April after Reuters reported that a consensus is forming around cutting the deposit rate in December, citing four unidentified members of the ECB Governing Council.

“To really channel the euro, it’s much more viable to use the deposit rate than it is scaling up quantitative easing,” said Mark McCormick, a New York-based strategist at Credit Agricole SA.

The euro was at $1.0728 as of 9:27 a.m. New York time, after falling to $1.0707 on Nov. 6, the lowest since April 23. It climbed 0.2 percent to 132.53 yen. Bloomberg’s Dollar Spot Index added 0.1 percent to 1,233.76, after surging 1.9 percent last week.

Volatility climbed Monday, with JPMorgan Chase & Co.’s Group-of-Seven FX Volatility Index rising to 10.06 percent, the highest level on a closing basis since Sept. 30.

[Bloomberg]