Euro’s post-ECB strength holds

Tokyo - The euro held gains against most of its Group-of-10 counterparts as a two-day drop in global equities spurred appetite for haven assets.

The single currency has surged 2.9% against the dollar since the stimulus measures announced December 3 by European Central Bank (ECB) President Mario Draghi underwhelmed market expectations.

The euro rose for a second day after the MSCI All Country World Index of shares tumbled on Tuesday as China’s trade data highlighted a slump in global demand that’s driven a decline in energy and commodity prices this year.

The nation’s central bank cut the yuan’s daily reference rate Wednesday to the weakest since August 2011.

“There is no incentive to sell the euro now, with the ECB having taken action and no follow-through seen for some time,” Kenji Yoshii, a currency strategist at Mizuho Securities in Tokyo. “It may rise if commodities prices slide further to spur risk aversion, which will favor developed-nation currencies over emerging and commodities currencies.”

The single currency advanced 0.2% to $1.0918 as of 07:22. It was unchanged at ¥133.90 from Tuesday in New York. The yen gained 0.2% to ¥122.66 per dollar.

Euro ‘consolidating’

“The euro is consolidating and making those holding dollar longs against the euro vulnerable,” said Naohiro Nomoto, an economist in New York at Bank of Tokyo-Mitsubishi UFJ. “People are unlikely to want to buy up the euro, but momentum isn’t for it to head toward parity.”

A decline in oil and iron ore prices since the end of last month has dimmed the allure of commodity currencies, driving the Canadian dollar to an 11-year low on Tuesday and the Aussie to its biggest two-day drop in almost six weeks.

Ore with 62% content delivered to Qingdao sank 1.1% to $38.65 a dry ton on Tuesday, a record low in daily prices compiled by Metal Bulletin dating back to May 2009. Crude rallied for the first time in four days on Wednesday, trading just above $38 a barrel after losing 8.7% in the past three days.

Canada’s currency was little changed at C$1.3567 per US dollar from Tuesday, when it touched C$1.3622, the lowest since June 2004. The Aussie bought 72.21 USc rom 72.15, after completing a two-day slide of 1.7%, the biggest since October 28.

The MSCI Asia Pacific Index of regional shares dropped 0.4% on Wednesday, extending the global equity selloff.