The US dollar fell against the euro on Thursday following the latest monetary policy decision from the European Central Bank, which maintained interest rates unchanged. The greenback further weakened in the wake of lackluster economic data in the United States.
Following its latest meeting, The European Central Bank said in a press release earlier today that the Governing Council decided to keep interest rates at 0% in a move that was widely expected by analysts. The central bank also lowered its inflation forecast for 2018 from 1.3% to 1.2% in a response to the stronger euro.
However, the shared currency rose to the highest level in more than a week despite the weaker inflation expectations after a speech by European Central Bank President Mario Draghi. In a conference that followed todayâs decision, Draghi said that policymakers reached a preliminary vision for how the central bank may scale back its quantitative easing program.
Draghi added that he expects the Governing Council to make a decision on tapering monthly purchases or the length of the program in the next meeting, which will be held on October 26.
The ECB president referred to the stronger euro as a source of uncertainty, but still supported expectations that the bank may begin cutting back its purchases in January. Meanwhile, interest rates may be kept unchanged for a period that goes well past the end of the bankâs net asset purchases, according to Draghi.
The greenback received little to no support from data releases in the United States today. The US Bureau of Labor Statistics said in a report that while nonfarm productivity rose to 1.5% in the second quarter of the year, unit labor costs declined to 0.2%. Nonfarm productivity was expected to increase to 1.3% in the last quarter from 0.9% in the previous quarter, while unit labor costs was forecast to fall to 0.3% from 0.6%.
A separate report by the US Department of Labor said that initial jobless claims rose 62,000 to 298,000 in the week ending September 2, missing estimates of an increase to 241,000. The higher number of applications for unemployment benefits last week increased the moving average for 4 weeks to 250,250.
EUR/USD traded at 1.1997 as of 14:40 GMT on Thursday after rising to 1.2044 at 12:50 GMT, the pairâs highest level since August 29. EUR/USD began trading today at 1.1923.
The Dollar Index, which tracks the performance of the US currency against its major peers, dropped to 91.61 as of 14:33 GMT today, the weakest level since January 2015, from 92.29 yesterday.
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