Euro Slumps Below $1.30 On ECB Decision
The euro traded steadily below $1.30 to finish the week after plummeting to a 14-month low on Thursday following the European Central Bank’s policy meeting.
The common currency traded at $1.2935 at 5:00 GMT on Friday morning after the region’s central bank unexpectedly elected to ease further.
ECB President Mario Draghi announced that the bank had lowered its main interest rate to 0.05 percent and that it was planning to roll out an asset buying program beginning in October.
Though Draghi had been hinting at the possibility of further easing over the past few weeks, most believe that the bank would hold off until the effects of its June stimulus package could be measured.
However, with the region’s declining inflation and sky high jobless rates, the bank was pushed into acting sooner. Reuters reported that some analysts believe that the bank’s aggressive tone has opened the door for further easing down the road.
Meanwhile, the dollar continued to rally despite lackluster jobs data that showed the nation’s private sector employers hired just 204,000 workers in August; below expectations for a 220,000 increase. Initial jobless claims also went up by 4,000 last week.
Moving forward, all eyes will be on U.S. non-farm payrolls figures, due out later in the day on Friday. If the figure meets expectations and shows that 225,000 new jobs were added in August, it will fuel speculation that the Federal Reserve will raise its main interest rate sooner than expected.
While the U.S. central bank has maintained a cautious tone about a rate hike, many believe the bank could decide to increase the rate as early as the first quarter of 2015.
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