The European Central Bank kept its monetary policy unchanged during today’s meeting, providing no surprise for Forex market participants. Yet the press-conference after the gathering was a real shocker as ECB President Mario Draghi made several dovish statements, sending the euro to fresh lows. The shared 18-nation currency managed to gain the Great Britain pound.
The ECB left its main interest rate close to zero, a decision that was expected by most economists. Yet Draghi made several very dovish remarks in the introductory speech at the press-conference, putting the FX market in a risk-off mode.
The President said:
Following up on the decisions of 2 October 2014, we last month started purchasing covered bonds under our new programme. We will also soon start to purchase asset-backed securities. The programmes will last for at least two years.
Furthermore, he stated:
Should it become necessary to further address risks of too prolonged a period of low inflation, the Governing Council is unanimous in its commitment to using additional unconventional instruments within its mandate.
With monetary policy being extremely lose in the foreseeable future and prospects for even more monetary stimulus, the euro was unable to hold ground and fell to the lowest level in more than two years versus the dollar.
EUR/USD sank from 1.2485 to 1.2412 as of 16:56 GMT today, trading near the lowest level since August 2010, after rising to 1.2533 earlier. EUR/JPY climbed from 143.14 to 144.21, the highest rate since January 2, but retreated to 142.54 later. EUR/GBP managed to gain from 0.7812 to 0.7825, though it was still far below the daily high of 0.7863.
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