The euro dropped to the lowest level in almost 14 months after the European Central Bank unexpectedly cut its main refinancing rate to a record 0.05 percent and introduced additional stimulus.
The shared currency fell against 31 major peers after ECB President Mario Draghi said the central bank will buy “a broad portfolio” of asset-backed securities starting next month. A dollar gauge gained as a report showed U.S. service industries climbed in August, bolstering chances for the Federal Reserve to raise interest rates. The yen approached the weakest since 2008 after the Bank of Japan kept its record stimulus unchanged.
“There were big expectations, and they met and exceeded those expectations with doing more,” Eric Stein, who oversees about $13 billion at Boston-based Eaton Vance Corp., said in a phone interview. “Draghi is on a clear path to provide as much monetary stimulus as he can to weaken the currency, increase inflation expectations, decrease deflationary expectations, and also keep the European economy on life support.”
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