EUR Falls After Dovish European Central Bank Rhetoric

The euro fell sharply after the European Central Bank (ECB) outlined its exit from quantitative easing (QE), but also claimed interest rates won’t likely budge for more than a year.

Sitting at around 1.1818 versus the dollar before the announcement, the euro fell to 1.1681 during Draghi’s subsequent press conference, shipping around 0.9 percent in value for the session.

The move was accelerated after data showed that U.S. retail sales surged in May, causing more buying of the dollar against a number of currencies.

The ECB has said that from September the pace of bond buying will fall from 30 billion euros ($34 billion) to 15 billion euros. The figure then falls to zero in December 2018.

Euro investors appeared to focus more on the statement from the bank’s governing council that key ECB rates are to remain at their present levels “at least through the summer of 2019”.

Interest rate on the main refinancing operations, marginal lending facility, and the deposit facility were unchanged today at 0.00 percent, 0.25 percent and -0.40 percent respectively.

via CNBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza