Euro stays higher versus dollar as ECB keeps rate at 1pc
The euro stayed higher against the dollar after the European Central Bank left its benchmark interest rate unchanged, a day after the Federal Reserve decided to increase asset purchases by $600bn.
The bank’s decision to keep the refinancing rate at 1pc was predicted by all 55 economists surveyed by Bloomberg News.
ECB President Jean-Claude Trichet said after the bank’s October 7 meeting that there was “absolutely no change” in the ECB’s stance from a month earlier and it would continue to gradually phase out its non-standard liquidity measures.
“Clearly if the ECB were to express concern about the euro’s gains recently that might knock it short term,” Adam Cole, head of global currency strategy at RBC Capital Markets in London, said before the decision. “There isn’t a lot on the ECB’s agenda.”
The euro gained 0.8pc to $1.4253 as of 12:52pm in London after reaching $1.4262. The currency ended little changed on October 7, when Trichet told reporters he opposed “disorderly” moves in currency markets.
The Dollar Index slumped to its weakest level since December after the Fed said late yesterday it was compelled to act because “progress” toward the objectives of full employment and stable prices “has been disappointingly slow.”