Euro Slides to 3 Month Low Against the Dollar
The euro fell to a three month low against the dollar on Wednesday morning after the European Central Bank confirmed that it intended to keep interest rates low and continue to adopt an expansionary policy.
The decision, opposite from the US Federal Reserve's current course of action, brought the common currency down to $1.2770, which some are expecting to see drop even lower.
ECB Executive Board Member Jorg Asmussen echoed Bank President Mario Draghi's remarks last week by saying the bank was planning to continue with low interest rates. While Draghi was vague about the bank's exact plans, saying only that the low rates would continue for an “extended period of time," Asmussen gave a more concrete timeline by saying the rates were likely to continue for at least 12 months.
Now, investors are waiting to hear from Asmussen as he speaks on Wednesday in Macedonia. He isn't expected to divulge any further forward guidance about the bank's policy.
Also expected today are minutes from a Federal Open Market Committee meeting, which took place in mid June. Following the meeting, Federal Reserve chairman Ben Bernanke had announced that the bank planned to taper its $85 billion per month bond buying stimulus plan.
The opposite paths of the Fed and the ECB have kept the euro under pressure recently, and the ongoing political and financial struggles of its members have been adding weight as well. Bloomberg reported that Standard & Poor's cut Italy' long term credit rating due to weakened economic projections and an uncertain financial system. The rating agency rated Italy as BBB, just two levels above junk and down from the nation's previous rating of BBB+.
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