The euro plunged against the majority of most-traded currencies this week after the European Central Bank expanded its monetary stimulus. There was another currency that suffered from its central bank’s policy decision — the Canadian dollar, which was even weaker than the euro.
Forex market participants were speculating about additional stimulus from the ECB for a long time. Often, when traders anticipate an event, it turns out to be not that impactful as its effect has already been priced in. Yet this time the impact was profound, sending the euro to the lowest level in more than 11 years. One of the reasons for such an outcome is that the size of stimulus was bigger than the market has counted on.
There was also a true surprise this week in the form of an interest rate cut from the Bank of Canada. While traders expected the ECB decision, the BoC move came out from nowhere, seriously damaging the performance of the Canadian dollar. The loonie even maintained its losses against the euro, albeit trimming them significantly.
EUR/USD sank from 1.1552 to 1.1207 (3.1 percent) this week. EUR/JPY tumbled from 135.69 to 132.03 (3 percent). EUR/GBP declined from 0.7634 to 0.7471 (2.1 percent). At the same time, EUR/CAD rallied from 1.3838 to 1.4376 and closed at 1.3919.
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