Euro drops, stocks rise as European Central Bank vows to keep rates low

Euro drops, stocks rise as European Central Bank vows to keep rates low

Euro drops, stocks rise as European Central Bank vows to keep rates low

In late Asian trade on Friday, the euro eased 0.2 percent to $1.1546, its lowest level since May 30. "As expected, the central bank is signalling an end to QE later this year via a three-month taper, albeit with an optionality to change position if the data deteriorates", Claus Vistesen, the chief eurozone economist at Pantheon Macroeconomics, said in an email.

The ECB said it would taper its bond-buying programme down to 15 billion euros a month in the fourth quarter from 30 billion euros a month now in a move that broadly met market expectations.

USA stocks mostly rose Thursday, as markets get accustomed to the idea of investing with less of a safety net from central banks around the world. Net purchases will then be stopped.

The meeting comes one day after the U.S. central bank raised rates, citing May's jobs report as a sign that the American economy continues to improve.

The ECB announced it would end its unprecedented bond purchase scheme by the end of this year, but said it would maintain rates at record lows at least through the summer of 2019.

Markets are now tracking BOJ Governor Haruhiko Kuroda's post-meeting briefing, which began at 0630 GMT, for clues on how long the central bank could hold off on whittling down stimulus given stubbornly weak inflation.

The common currency shed 1.9 percent to the dollar after the rate comments, in its sharpest daily fall in nearly two years since Brexit vote shock in 2016.

However gradual, the exit is nonetheless a milestone for the eurozone economy, which recovered more slowly from the Great Recession than the U.S. Unemployment in the 3.8 percent, less than half the eurozone's 8.5 percent.

While rate moves will not be on the ECB's agenda for months, policymakers in public and private have said that market pricings for such a move are realistic. That could make loans somewhat more expensive for homebuyers and companies looking to invest. While a rebound is likely, the U.S. Fed's tightening stance will limit the potential for a big rise in the euro.

President of the European Central Bank Mario Draghi listens during the news conference following the meeting of the Governing Council of the European Central Bank in Riga, Latvia June 14, 2018.

Its U.S. counterpart, the Federal Reserve, has already halted bond purchases and has increased interest rates seven times since late 2015. 10-year Treasurys yield 2.95 percent. The parties have promised spending that could lead to Italy violating eurozone limits on deficits. The initial plan was to buy bonds worth Euro 1 trillion.

Among single stocks, Rolls Royce (RR.L) jumped 7.6 percent higher after saying it would exceed its 2020 guidance as it announced new ambitious mid-term goals.

The stimulus on both ends was unprecedented in size.

The stimulus has also pushed up the prices of investments likes stocks and bonds.

The DAX (German stock index) logo is seen at the stock exchange in Frankfurt, Germany, March 23, 2018. It gained 1.1 percent to $76.74 per barrel on Wednesday.

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