An apparent split within the European Central Bank and a surging Wall Street conspired this morning to drag down the euro. By 11:00 AM, the euro fell from yesterdayÃ¢â‚¬â„¢s close of $1.3255 to $1.3204 and appeared primed to head even lower by the end of the day.
The euro sell-off gathered steam shortly after European Central Bank council member Ewald Nowotny suggested that he did not personally support cutting the benchmark rate below 1 percent but it still remained a point Ã¢â‚¬Å“open for discussionÃ¢â‚¬Â. Meanwhile, the Dow gained nearly 200 points mid-way through the morning session fueled by news that Wells Fargo & Co. Ã¢â‚¬â€œ the second-largest U.S. mortgage lender Ã¢â‚¬â€œ had earned $3 billion in the first quarter far surpassing estimates. This news spurred a resurgence in bank stocks that have single-handedly propelled markets into positive territory after several days of losses.
NowotnyÃ¢â‚¬â„¢s comments appear to confirm that the ECB has yet to arrive at a decision on how to best proceed even as signs point to worsening conditions within the eurozone. Last weekÃ¢â‚¬â„¢s interest rate cut of just 0.25 percent was universally panned by critics expecting at least half a point reduction and the criticism seems justified with retail sales for the month of March down a full 4 percent. Unemployment within the eurozone is at a three-year high with some 13.5 million people Ã¢â‚¬â€œ or 8.5 percent of the population Ã¢â‚¬â€œ currently looking for work.
Finally, Nowotny also appeared to pour cold water on the BankÃ¢â‚¬â„¢s promised efforts to introduce expanded quantitative easing to help introduce more money into the economy. Describing the purchase of commercial paper and corporate bonds as a Ã¢â‚¬Å“sensible and efficient measureÃ¢â‚¬Â to ease credit concerns, Nowotny then noted that it would take some time to implement such a program and he could not offer a realistic time frame for the start of a dedicated re-purchase program.
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