MW: Euro spikes, holding on to gains as ECB news conference begins
The euro spiked against the dollar Thursday after the European Central Bank opted to leave interest rates unchanged, holding on to those gains as President Mario Draghi started his news conference.
While its initial reaction to the news was muted, the euro quickly spiked EURUSD, +0.7878% as investors awaited the beginning of the ECB press conference. It held on to those gains as press conference began, trading at $1.1354, compared with $1.1304 late Wednesday in New York.
Meanwhile, the greenback trimmed its decline against the yen USDJPY, -0.15% after U.S. data showed jobless claims last week fell to the lowest level since 1973 — adding to a string of strong weekly jobs data. The dollar bought was changing hands at ¥109.68 in recent trade, compared with ¥109.85 late Wednesday in New York.
Read: Here’s why Mario Draghi will backpedal on ECB interest rates
Market strategists widely expected the ECB, led by President Mario Draghi, to keep interest rates on hold Thursday after the central bank announced a spate of expanded stimulus measures at its meeting in March.
Those included cutting its deposit rate even further into negative territory at minus 0.4%. It also increased the size of its monthly bond purchases to €80 billion, among other measures.
But that doesn’t mean investors expect Draghi to sit on his hands. Economists at Capital Economics said they expected the ECB chief to reassure investors that the central bank could again expand its efforts to counteract a deteriorating domestic outlook.
“He will almost certainly defend the ECB’s independence amid claims from German politicians that monetary policy is now too loose, stressing that policy is appropriate and that the Bank is prepared to do even more if necessary,” the economists said in a note to clients.
The ICE U.S. Dollar index DXY, -0.29% a measure of the buck’s strength against six of its main rivals, was down 0.3% at 94.1700.
In other trading, the British pound GBPUSD, +0.7256% strengthened to $1.4424, compared with $1.4338 late Wednesday, despite a weak report on March retail sales that added to evidence that a first-quarter slowdown was worse than expected in the U.K.
