Euro surges as Draghi holds back, oil prices up after Hurricane Harvey

The euro hit a 2 1/2-year high early on Monday after European Central Bank President Mario Draghi refrained from talking down the single currency, while oil prices rose after Hurricane Harvey struck at the heart of the U.S. energy industry.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.1 per cent, and Japan’s Nikkei advanced 0.2 per cent.

S&P E-mini futures slipped slightly.

Speaking at the U.S. Federal Reserve’s annual conference in Jackson Hole, Wyoming, Draghi said the ECB’s ultra-easy monetary policy was working and the euro zone’s economic recovery had taken hold, but didn’t cite the common currency’s strength as a concern or discuss monetary policy specifically.

The euro rose to as high as $1.9665 early on Monday and was last up 0.3 per cent at $1.1955, extending Friday’s 1 per cent jump.

“The EUR bulls will feed off anything they can get that suggests a less accommodative stance going forward,” Chris Weston, chief market strategist at IG in Melbourne, wrote in a note.

The dollar was slightly lower at 109.29 yen, adding to Friday’s 0.2 per cent slide after Federal Reserve Chair Janet Yellen, speaking at the same event as Draghi, also failed to address policy, focusing more on financial stability.

Yellen’s remarks disappointed some investors who had hoped for hints on the Fed’s plans for interest rates.

The 10-year U.S. Treasury yield closed at 2.171 per cent on Friday, from Thursday’s 2.194 and further undermining the dollar’s yield appeal.

But lower bond yields helped give stocks a slight boost, with the Dow and the S&P 500 both ending about 0.15 per cent higher on Friday, although the Nasdaq closed about 0.1 per cent lower.

Investors see a 40.7 per cent chance of a rate hike by the Fed in December, down from 45.6 per cent a month ago, according to the CME FedWatch tool.

Brent, the global crude oil benchmark, rose 0.6 per cent to $52.72 a barrel, adding to Friday’s 0.7 per cent increase.

U.S. oil pulled back slightly to $47.82, after Friday’s 0.9 per cent gain.

The U.S. Gulf Coast, which includes Texas, is home to nearly half the United States’s refining capacity, and the reduced output could affect gasoline supplies across the U.S. Southeast and other parts of the country.

Operators had shut down several refineries and evacuated offshore platforms last week as the storm crossed the Gulf of Mexico.

Spot gold crept up 0.15 per cent to $1,293.04 an ounce early on Monday, extending Friday’s 0.4 per cent gain.