The Euro declined by the most for two years against its US counterpart as the European Central Bank delivered a rate decision which surprised economists and investors.
The Euro is currently trading against the US Dollar in the region of 1.3358
While economists had forecast that the ECB would hold the benchmark rate at 0.5 per cent, the central bank actually opted to slash its main refinancing rate to a fresh record low of 0.25 per cent in an effort to support the Eurozone’s economic recovery.
The Euro plummeted against the majority of its most traded currency rivals in the aftermath of the unexpected manoeuvre.
As currency analyst Eimear Daly commented; ‘There’s been a massive move in the Euro. All the signs pointed towards a cut but usually the ECB are quite reluctant to act, which is why people thought they would hold off. Draghi was backed into a corner with inflation where it is. Also the strength of the Euro was a big factor.’
The Euro hit a seven-week low against the ‘Greenback’ and extended losses once US GDP data was published.
ECB President Mario Draghi told reporters; ‘Our monetary policy stance will remain accommodative for as long as necessary. […] We continue to monitor closely money market conditions and their potential impact on our monetary policy stance. We are ready to consider all available instruments.’
The US growth data also defied expectations by showing stronger than forecast growth in the third quarter of the year.
While economists envisaged US growth slowing in the third quarter, declining to 2.0 per cent from the 2.5 per cent year-on-year expansion recorded in the second quarter, the US economy actually grew by 2.8 per cent.
The unexpectedly strong result is likely to stoke speculation regarding the prospect of the Federal Reserve tapering stimulus before the Spring and could bolster the US Dollar in the days ahead.
However, with influential US non-farm payrolls data still to be published tomorrow, further currency market volatility can be expected.
Tomorrow’s German trade balance data will also be of interest.
Euro (EUR) Exchange Rates
As of 16:00
The Euro/US Dollar Exchange Rate is currently in the region of: 1.3358 >
The Euro/Pound Sterling Exchange Rate is currently in the region of: 0.8342 <
The Euro/Australian Dollar Exchange Rate is currently in the region of: 1.4144 <
The Euro/ New Zealand Dollar Exchange Rate is currently in the region of: 1.5987 <
The Euro/ Canadian Dollar Exchange Rate is currently in the region of: 1.3946 <