JAKARTA, CITRAINDONESIA.COM- The euro touched its weakest level since July and stocks in the region fell after their first back-to-back gains in two weeks as investors speculated that the European Central Bank may lay the groundwork for future easing of monetary policy.
Overnight implied volatility on the euro against the dollar jumped to a three-month high before President Mario Draghiâ€™s explanatory briefing after the ECB left interest rates unchanged.
The dollar rose after Federal Reserve Bank of New York President William Dudley reiterated he sees a U.S. rate hike this year. Mexicoâ€™s peso reached a six-week high after the final U.S. presidential debate.
Saudi Arabiaâ€™s bonds rose after a record $17.5 billion sale on Wednesday. The Stoxx Europe 600 Index fell 0.2 percent on mixed earnings. Oil slid under $51 a barrel.
The ECB kept its quantitative-easing program and interest rates unchanged as predicted by all economists in a Bloomberg survey. Attention now turns to Draghi for any hints of tweaks to its 1.7 trillion-euro ($1.9 trillion) bond-buying program, particularly the rules governing what debt can be bought.
While the stimulus is scheduled to end in March, economists forecast it will be extended in December amid weak growth and an inflation level still closer to zero than the ECBâ€™s goal.
â€œDraghi will have an expectation-management problem,â€ former ECB Director General for market operations Francesco Papadia said in a Bloomberg TV interview with Francine Lacqua.
â€œIf he doesnâ€™t say anything today that may be seen as a disappointment for the market. He will be asked and will have to say something. My sense is that the ECB may be looking beyond bonds. I have in mind in particular, equities, possibly in the form of exchange-traded funds, and bank loans.â€
The euro fell as much as 0.2 percent versus the greenback and stood at $1.0984 at 12:49 p.m. in London. The single currency has slipped more than 2 percent in October, after trading in its tightest quarterly range against the dollar on record in the three months through September.
The Bloomberg Dollar Spot Index advanced 0.1 percent, rebounding from a one-week low.
Mexicoâ€™s peso climbed as much as 0.4 percent to 18.4558, the most since Sept. 8, before trading 0.1 percent weaker at 18.5339.
The currency has risen more than 4 percent this month as opinion polls pointed to a growing likelihood that Trump will lose the coming election.
The peso has been sensitive to the Republican candidateâ€™s fortunes because heâ€™s proposed renegotiating or ending trade deals with Mexico and blocking remittances to force the country to pay for a wall along the U.S. border.
The Aussie weakened 0.8 percent after data showed employment fell by 9,800 in Australia last month, compared with an increase of 15,000 forecast by economists in a Bloomberg survey.
The MSCI Emerging Markets Currency Index slipped 0.1 percent after rising 0.7 percent in the previous two sessions. South Africaâ€™s rand led decliners, dropping 0.4 percent in its first day of losses this week.
Turkeyâ€™s lira erased losses to trade little changed after policy makers kept interest rates on hold, defying expectations for a cut and reassuring investors the central bank will act to contain the currencyâ€™s weakness.
The central bank has cut the rate by 2.50 percent this year, lowering it at every monthly meeting since March amid constant calls from the government for easier credit conditions to revive the slowing economy.
The Philippine peso gained 0.4 percent, the best performer among its peers. President Rodrigo Duterte and Chinese President Xi Jinping â€œagreed to return to track of dialogueâ€ on South China Sea issues in what is â€œa new stage of maritime cooperation,â€ Vice Minister for Foreign Affairs Liu Zhenmin said at briefing in Beijing.
The Stoxx 600 slipped 0.2 percent after rising for two straight days, as investors awaited the ECB and weighed mixed earnings reports. (*)