· The euro extended gains to a 2-1/2-year high against the dollar on Monday after the European Central Bank president did not try to talk down the currency and as markets worried about the impact of Tropical Storm Harvey on the U.S. economy.
The euro was 0.15 percent higher at $1.1934 EUR= after rising to $1.1966, its highest since January 2015.
The common currency had already surged about 1 percent on Friday after ECB President Mario Draghi spoke at Jackson Hole on subjects such as global trade but did not touch upon the euro’s recent strength.
The euro jumped more than 1 percent and yields on benchmark U.S. government debt remained at unattractive rates on Friday after the world’s two leading central bankers declined to discuss monetary policy in keynote speeches.
· Federal Reserve Chair Janet Yellen’s non-policy remarks at an annual meeting of central bankers in Jackson Hole, Wyoming pushed U.S. Treasury debt yields lower and increased chances that the U.S. central bank will not raise interest rates in December as had been widely anticipated.
· The euro, meanwhile, jumped more than 1 percent after European Central Bank President Mario Draghi, speaking after Yellen, did not talk down the euro zone single currency’s strength as some investors had speculated.
· Yellen told bankers that regulatory reforms enacted after the financial crisis a decade ago have strengthened the banking system without impeding economic growth.
· Draghi said global trade and cooperation is under threat, a risk to productivity and ultimately growth in advanced economies.
The dollar index .DXY fell 0.78 percent and the euro EUR= gained 1.03 percent to $1.1919. The Japanese yen strengthened 0.23 percent versus the greenback at 109.30 JPY=.
Benchmark 10-year U.S. Treasury notes US10YT=RR rose 6/32 in price, pushing the yield down to 2.1711 percent.
· Federal Reserve Chair Janet Yellen, looking back a decade after the onset of the financial crisis, said Friday the financial system is safer now than it was then though some adjustments to regulations may be needed.
The central bank chief spoke at the Fed's annual conference in Jackson Hole, Wyoming.
Though the speech is closely watched in financial markets, Yellen offered no clues about the future of monetary policy, instead focusing on the history of the crisis and what regulators have done in response. She warned that future crises are inevitable but said the housing meltdown taught valuable lessons.
"The events of the crisis demanded action, needed reforms were implemented, and these reforms have made the system safer," she said in prepared remarks.
Fed watchers had been looking for some level of reflection from Yellen about the Fed's response to the crisis, and that was the focus of the speech. She cited the need for the bailout programs put into place in response to a liquidity crush on Wall Street and touted the effectiveness of the new regulations, such as the Dodd-Frank reforms.
However, she said the Fed is continually reviewing the moves to see what's working and what might be holding back the system.
· Janet Yellen delivered a message to President Donald Trump on Friday, making it clear that if he re-nominates her as Federal Reserve chair she will not turn her back on the raft of U.S. financial reforms that Republicans want to roll back.
· Following Fed Chair Yellen's speech, chance of Fed rate hike falls from 44% earlier today to 37% according to CME's FedWatch Tool.
· The European Central Bank’s ultra-easy monetary policy is working and the euro zone’s economic recovery has taken hold even if more time is needed to lift inflation to the bank’s 2 percent target, ECB President Mario Draghi said on Friday.
Speaking at the U.S. Federal Reserve’s annual conference in Jackson Hole, Wyoming, Draghi said he was confident inflation would eventually reach the target as output rises and the labor market tightens, though he urged patience on that front.
· U.S. President Donald Trump renewed his threat to scrap NAFTA and ripped on trading partners Canada and Mexico in a tweet early on Sunday, days before the three countries were scheduled to hold a second round of negotiations on rewriting the 23-year-old agreement.
· Oil prices rose nearly 1 percent on Friday as the dollar fell and the U.S. Gulf Coast braced for Hurricane Harvey, on track to become the biggest storm to hit the United States mainland in more than a decade.
U.S. crude futures CLc1 settled up 44 cents, or 0.9 percent, at $47.87 a barrel but down 1.3 percent on the week.
Brent crude LCOc1 ended 37 cents, or 0.7 percent, higher at $52.41 and down 0.6 percent on the week.
Reference: Reuters, Daily FX, CNBC
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