NEW YORK (MarketWatch) — The euro extended its losses against the dollar Friday after the European Central Bank began purchasing asset-backed securities, expanding its quantitative easing regimen as inflation expectations for the eurozone continued to dim.
The euro EURUSD, -1.17% traded at $1.2410, its lowest level since Friday Nov. 14. It traded at $1.2547 Thursday afternoon.
The People’s Bank of China cut lending rates for the first time in two years Friday, highlighting the continued divergence between Fed policy and other central banks.
The move also weighed on the euro and the pound, analysts from Scotiabank said in a Friday research note. “Not everyone in the market was expecting that [rate cut],” said Michael Woolfolk, global markets strategist at BNY Mellon.”
“The Chinese are concerned about maintaining the pace of growth in their economy and this is one way to stimulate it,” Woolfolk added.
The ABS purchases represent the second leg of the ECB’s quest to catalyze growth by expanding its balance sheet. In September, the central bank began buying covered corporate bonds, which are guaranteed against a company’s assets.
The bank expects to continue its asset purchases for at least two years. If both programs fail, investors expect the central bank to add a third leg — purchases of government bonds — to its QE program.
Earlier Friday, ECB President Mario Draghi said its short-term inflation expectations for the eurozone were excessively low during a speech at the European Banking Conference, which initially weighed on the euro.
The falling euro supported the ICE U.S. Dollar Index DXY, +0.69% , a measure of the greenback’s strength against a basket of six currencies, which rose above a psychologically significant level of 88.0000. It was recently up 0.68% to 88.1930.
Signs of weakening inflation continued to weigh on the pound as it extended the prior session’s losses against the dollar to a fresh 14-month low.
Data released Thursday showed the U.K. retail sales price deflator had fallen by 1.5% in October from a year ago, pressured by the falling price of oil, an indication that inflation remains weak.
The pound GBPUSD, -0.30% traded at $1.5657, compared to $1.5695 Thursday afternoon. Elsewhere, the dollar traded lower against the yen for the second straight day.
The greenback USDJPY, -0.43% traded for 117.76 yen, compared to ¥118.07 Thursday afternoon after comments from Japanese Finance Minister Taro Aso, saying that the decline in the yen has been too rapid, helped move the yen higher.
marketwatch.com
The euro EURUSD, -1.17% traded at $1.2410, its lowest level since Friday Nov. 14. It traded at $1.2547 Thursday afternoon.
The People’s Bank of China cut lending rates for the first time in two years Friday, highlighting the continued divergence between Fed policy and other central banks.
The move also weighed on the euro and the pound, analysts from Scotiabank said in a Friday research note. “Not everyone in the market was expecting that [rate cut],” said Michael Woolfolk, global markets strategist at BNY Mellon.”
“The Chinese are concerned about maintaining the pace of growth in their economy and this is one way to stimulate it,” Woolfolk added.
The ABS purchases represent the second leg of the ECB’s quest to catalyze growth by expanding its balance sheet. In September, the central bank began buying covered corporate bonds, which are guaranteed against a company’s assets.
The bank expects to continue its asset purchases for at least two years. If both programs fail, investors expect the central bank to add a third leg — purchases of government bonds — to its QE program.
Earlier Friday, ECB President Mario Draghi said its short-term inflation expectations for the eurozone were excessively low during a speech at the European Banking Conference, which initially weighed on the euro.
The falling euro supported the ICE U.S. Dollar Index DXY, +0.69% , a measure of the greenback’s strength against a basket of six currencies, which rose above a psychologically significant level of 88.0000. It was recently up 0.68% to 88.1930.
Signs of weakening inflation continued to weigh on the pound as it extended the prior session’s losses against the dollar to a fresh 14-month low.
Data released Thursday showed the U.K. retail sales price deflator had fallen by 1.5% in October from a year ago, pressured by the falling price of oil, an indication that inflation remains weak.
The pound GBPUSD, -0.30% traded at $1.5657, compared to $1.5695 Thursday afternoon. Elsewhere, the dollar traded lower against the yen for the second straight day.
The greenback USDJPY, -0.43% traded for 117.76 yen, compared to ¥118.07 Thursday afternoon after comments from Japanese Finance Minister Taro Aso, saying that the decline in the yen has been too rapid, helped move the yen higher.
marketwatch.com
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