The Euro to US Dollar (EUR/USD) exchange rate declined sharply and the Euro to Pound (EUR/GBP) exchange rate softened after European Central Bank (ECB) President Mario Draghi said that the bank will soon begin to buy asset backed securities and hinted that more unconventional measures could be introduced.
After the ECB chose to leave interest rates unchanged at the record low level of 0.05%, bank president Mario Draghi told reporters that its program of buying some bonds would continue for at least two years.
The ECB voted to keep its headline interest rate on hold at record lows of 0.05% earlier Thursday. The bank also held the marginal lending rate at 0.3% and the deposit facility rate at minus 0.2%, in a widely anticipated decision.
Draghi added that the bank hopes to move its balance sheet back towards levels not seen since early 2012. He also said that policy makers remained unanimous in their commitment to introduce further stimulus measures in order to tackle low inflation if needed.
“The Governing Council is unanimous in its commitment to using additional unconventional instruments within its mandate. The Governing Council has tasked ECB staff and the relevant Eurosystem (central bank) committees with ensuring the timely preparation of further measures to be implemented if needed,” Draghi said in the press conference that followed the interest rate announcement.
Following Draghi’s comments, the single currency weakened against all but two of its most traded peers.
EUR/USD Exchange Rate Tumbles
Against the US Dollar, the Euro declined to its weakest level in two years as the diverging trends of the US and Eurozone economies were further highlighted by the release of more strong US economic data.
The ‘Greenback’ surged after data showed that the number of Americans filing for first time unemployment benefits declined by 10,000 last week to bring the total to 288,000. On a monthly basis, the measure showed that the number of new claimants fell to a 14-year low. In comparison, unemployment across Europe remains stubbornly high.
Against the Pound, the Euro settled back into the region of 0.781, but is forecast to soften further after UK data was not as bad as expected. Data released earlier in the session showed that manufacturing and industrial production increased more than forecast last month.
Sterling saw little movement after the Bank of England chose to leave interest rates unchanged at the record low level of 0.5%.
Euro Exchange Rate News:
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Euro,,US Dollar,1.2439 ,
Euro,,British Pound,0.7814 ,
Euro,,Canadian Dollar,1.4194 ,