By James Ramage
The euro pared earlier losses against the dollar Friday after comments from European Central Bank President Mario Draghi suggested further measures to stimulate the sluggish economy and weaken the common currency weren't forthcoming.
The euro traded 0.3% lower the dollar to $1.3246 following Mr. Draghi's comments. Earlier in the Americas session, the common currency fell as low as $1.3220 against the dollar.
The ECB president signaled an inclination in his comments at the Federal Reserve Bank of Kansas City's annual Jackson Hole, Wyo., conference to move away from an austerity-based outlook and urged European politicians and central bankers to work to boost overall demand, consumer prices and employment in the stagnant euro zone.
Richard Cochinos, head of Americas G-10 foreign exchange strategy at Citigroup Inc., said Mr. Draghi didn't offer the market anything new.
"The market was looking for a hint of Draghi increasing policy in September from what he introduced in June," Mr. Cochinos said. "It's a little bit of a disappointment from what the market would expect. So, people are taking back small amounts of the large euro short positions in the market."
Investors continue to have a negative view of the euro, with net wagers at $23.1 billion through the week of Aug. 19, Commodity Futures Trading Commission numbers show.
The euro has dropped against the dollar since May, when it nearly reached $1.40. Despite the euro's decline, the currency remains too strong for many European politicians and central bankers. A strong single currency makes euro-zone goods and services more expensive in global markets, which dampens exports; it also keeps inflation low by reducing the cost of imported goods.
In addition to low inflation, euro-zone economies have been struggling through stagnant growth, including its largest constituents, Germany and France. The economic bloc has battled unemployment at more than 11% that sits far above levels in the U.S. or the U.K., both of which continue to see labor-market conditions improve.
Earlier in the day, the dollar rose against the yen and euro after comments by Federal Reserve Chairwoman Janet Yellen signaled the central bank would continue to take its time before it raises interest rates for the first time since 2006.
Ms. Yellen acknowledged in her conference speech that even as the U.S. economy has made significant progress in recovering from the financial crisis, the labor market continues to lag behind.
Ms. Yellen's comments suggested that the timeline for the first Fed rate increase won't be moved back, said Camilla Sutton, chief currency strategist at Scotiabank.
The greenback rose to a seven-month high against the yen at (Yen)104.20 after Ms. Yellen's comments, before it settled at (Yen)103.91 in late trade, down 0.1% for the day.
- Write to James Ramage at email@example.com
(END) Dow Jones Newswires
August 22, 2014 16:42 ET (20:42 GMT)
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