LONDON, March 10 The euro jumped to a three-week
high versus the dollar and German government bond yields rose on
Friday, on news the European Central Bank had discussed the
possibility of raising interest rates before ending its
quantitative easing programme.
Sources told Reuters some ECB rate-setters had raised the
possibility of hiking rates from their current record lows
before the end of QE, but that the discussion was brief, and
there was not broad support for the idea.
The euro, already trading up on the day, added another 0.4
percent to reach $1.0669, its strongest since Feb. 17.
That sent the dollar index to a one-week low of 101.38
The euro also hit a 1-1/2-month high of 122.745 yen
, up almost 1 percent on the day.
"It's a bit odd that you would continue to ease with QE and
hike rates at the same, so we're struggling to understand this a
bit," said Rabobank strategist Lyn Graham-Taylor.
Germany's 10-year government bond yield hit the day's high
of 0.48 percent, up 6 basis points on the day. Most other
10-year debt of euro zone government bond yields were also up
4-5 bps on the day.
German five-year yields hit a one-month high of minus 0.40
percent, up 8 bps on day. Meanwhile, Euribor futures fell as
money market investors started to price in rate rises from the
ECB as early as December 2017.
European stocks erased nearly all their gains to
last trade flat on the day, having been up as much as 0.5
(Reporting by Jemima Kelly, Dhara Ranasinghe, Abhinav
Ramnarayan, John Geddie and Vikram Subhedar; Editing by)