By Deborah Levine and Sarah Turner, MarketWatch
SAN FRANCISCO (MarketWatch) — The dollar erased most of its losses against the euro on Thursday after European Central Bank President Mario Draghi said the ECB would launch an “outright monetary transaction” plan, after analysts expected the central bank to say it would begin buying sovereign debt.
The ICE dollar index DXY +0.16% , which measures the greenback against a basket of six currencies, turned up to 81.282 versus 81.253 in late North American trading on Wednesday.
The euro EURUSD -0.1281% traded at $1.2595, off a high of $1.2651 and from $1.2596 Wednesday.
Draghi’s plan closely resembled details of such a program that leaked out Wednesday, including the condition that countries must seek an international bailout before the ECB will buy their bonds. Neither Spain nor Italy has done so. Read Wednesday's currency report.
“We had been looking for the market to be disappointed with whatever Draghi announced today, especially given the key obstacle to implementation — neither Spain nor Italy appear prepared to request the aid,” said Marc Chandler, a currency strategist at Brown Brothers Harriman. “That precondition was reiterated by Draghi.“
The ECB had already said it would keep interest rates on hold, though many economists had expected officials to lower rates as part of a plan to spur economic growth in the region — which is seen as key in helping countries service their debt loads. Read more on ECB.
Bank of England, Australian data
The Bank of England also held its monthly policy meeting and opted to leave interest rates where they were. The British pound GBPUSD +0.0164% slipped to $1.5901 from $1.5906 Wednesday.
Against the Japanese yen , the U.S. dollar USDJPY +0.7047% jumped to 78.91 yen compared with ÂĄ78.40 in late trading the previous day.
The WSJ dollar index XX:BUXX +0.13% , which measures the dollar against a slightly larger basket, rose to 70.92 from 70.88 late the previous day.
The dollar had been under pressure since Asian trading hours after Australian employment data prompted a bit of buying of riskier assets.
Australia’s unemployment rate unexpectedly dropped in August, although analysts said the data actually point to softness in the labor market. Read more on Australian jobs data.
The Australian dollar AUDUSD +0.4550% advanced to $1.0233 from $1.0189 Wednesday.
Deborah Levine is a MarketWatch reporter, based in New York.
Sarah Turner is MarketWatch's bureau chief in Sydney.
