Euro Sinks After ECB Hints At More Easing

The euro fell below $1.24 to finish the week after Thursday’s European Central Bank meeting reignited speculation of more easing to come. The common currency traded at $1.2395 at 8:30 GMT on Friday morning as the dollar moved in the opposite direction on the Federal Reserve’s diverging policy.

Reuters reported that investors took ECB President Mario Draghi’s remarks following the bank’s policy meeting to mean that he and his peers are planning to unveil even more asset purchases in the months to come. Draghi said that the bank is looking to expand its balance sheet to the levels seen in March 2012 at the height of the crisis. In order to meet a target of more than three trillion euros, the bank will need to increase its asset purchases in the coming months.

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Most analysts see the bank beginning a sovereign bond quantitative easing program in December, though reports of a division among the region’s central bankers over more easing has added another layer of uncertainty. At the press conference following the bank’s meeting, Draghi paid no mind to reports that the bank’s governing council was not in agreement over the idea of further easing, saying that all of the ECB’s members are prepared to make the necessary changes if the region’s economy continues to decline.

Meanwhile, the dollar moved in the opposite direction as investors saw the Federal Reserve’s policy diverging from the rest of the world’s central banks’. While the ECB looks to ease further, the Fed is widely expected to raise its interest rates next year now that its quantitative easing program is finished.