Draghi steals Yellen limelight as ECB propels top currency trade

Traders in the almost $1.3 trillion-a-day euro-dollar market have started to take their cues from Mario Draghi rather than Janet Yellen, according to Barclays Plc. About half of respondents to a Barclays survey said European Central Bank policy is the most important driver of the euro-dollar exchange rate this quarter. That’s up from approximately 30% in September. The ECB bumped US Federal Reserve policy from first place, as about 30% of participants called the Fed the most important determinant for the currency pair, down from more than 40% in a poll published Sept. 15. Barclays Global Marco Survey Draghi, president of the ECB since 2011, suggested on Oct. 22 that the central bank may carry out additional stimulus measures, which typically depress currencies. That contrasts with the US, where the greenback has rallied on speculation that the Fed is moving closer to raising interest rates. "Investors remain bearish on euro-dollar, but there has been a clear shift in terms of its drivers, with more thinking it will be driven by ECB easing rather than Fed tightening," Guillermo Felices, head of asset allocation in Europe at Barclays, said in a note Nov. 3. The London-based bank is the world’s third-biggest foreign exchange trader, according to a Euromoney survey. The survey is based on responses from 651 Barclays clients, including hedge funds, money managers and traders, from Oct. 22 to Oct. 29. More than 60% of survey respondents cited the dollar as their favorite bullish bet, while almost half called the euro their favorite bearish position. The currency pair accounts for almost a quarter of the $5.3 trillion traded each day in the foreign-exchange market. The common currency dropped 0.9% to $1.0866 as of 5 p.m. in New York on Wednesday after touching the lowest in more than three months. It’s fallen 10% against the dollar this year. (By Lananh Nguyen/Bloomberg)