Euro slides as ECB's Draghi sends dovish rate signals
The euro tumbled on Thursday after European Central Bank president Mario Draghi said the bank discussed a further interest rate cut and raised the possibility of further easing measures to counter weak inflation in the euro zone.
Europe's shared currency fell to a one-month low against sterling, a more than two-week trough versus the US dollar, and a three-week low against the yen as Draghi gave a downbeat assessment of the region's economy.
The ECB held rates steady as expected at a meeting in Malta. The ECB cut rates to rock-bottom levels over a year ago and has repeatedly said they have hit “the lower bound”.
In a news conference, Draghi said it would review in December what more it could do to tackle the threat of weak inflation, adding that a further cut to the deposit rate was brought up and the ECB council was ready to act.
In addition, the ECB chief also cited the euro's recent strength as a downside risk to the economy.
“Draghi delivered all kinds of dovish signals which weighed on the euro,” said Vassili Serebriakov, currency strategist at BNP Paribas in New York. “He was as dovish as can be without changing policy.”
In mid-morning New York trading, the euro was down 1.5 per cent versus sterling at 72.45 pence. Earlier it fell to a one-month low of 72.42.
The euro zone single currency dropped to a three-week low of US$1.1155 and was last at US$1.1165, down 1.5 per cent on the day.
Against the yen, the euro slid to its lowest since Oct. 2 at 134.30 yen. It last traded at 134.40, down 1.6 per cent.