Euro Drops as ECB Buys Covered Bonds

Yesterday, the ECB announced that it is buying covered bonds as part of a plan to try to keep the eurozone economy from sliding back into recession. This announcement is weakening the euro, and the 18-nation currency is down against its major counterparts.

Mario Draghi, the President of the European Central Bank, has said on many occasions that policymakers are willing to take drastic steps in the name of economic support for the eurozone. Those warnings are now coming to fruition, with the ECB moving toward new measures designed to keep the ailing eurozone economy afloat.
Yesterday, ECB spokespeople announced that the central bank is buying covered bonds in an effort to increase liquidity. The hope is that the purchase of covered bonds will keep money inexpensive and encourage lending so that the eurozone economy can keep moving.
With the eurozone economy threatening recession again, and countries in the periphery worried about what’s next, the ECB is trying anything to keep the eurozone viable, and the euro from breaking apart. As expected, though, this means a lower euro.
At 10:48 GMT EUR/USD is down to 1.2761 from the open at 1.2800. EUR/GBP is down to 0.7901 from the open at 0.7919. EUR/JPY is down to 136.3640 from the open at 136.8920.

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