The euro dipped below $1.13 on Thursday after the European Central Bank postponed the timing of its first post-crisis rate hike to 2020 at the earliest. ECB also launched a new round of cheap loans to banks.
The decision to tweak the bank’s forward guidance on rates was a surprise for many investors. However, the move in the euro was relatively small.
The single currency dropped 0.2 percent to $1.1275 from above $1.13 before the decision. The euro also fell slightly versus the Swiss franc to 1.1354 francs. The dollar, measured against a basket of currencies, rose 0.3 percent to 97.118 as the euro sold off.
Investors have been hoping for a trigger to shake the euro/dollar out of its current narrow trading range.
The currency pair has experienced a quiet start to 2019 as central banks have put off tightening monetary policy as economic momentum slows. That has left investors struggling to decide on direction.
START TRADINGForex – Euro below 1.13$ after ECB announcement
The dollar should slip over the coming year because U.S. economic growth is slowing and any boost from a resolution in the U.S.-China trade conflict is already priced in, according to a Reuters poll of strategists.
The Canadian and Australian dollars remained near two-month lows after investors bet their central banks would ease monetary policy as their economies slow. The Aussie fell to a two-month low of $0.70205 after weaker-than-expected retail sales data, then recovered by 0.2% to $0.7049. The Canadian dollar slid to its lowest since Jan. 4 after the Bank of Canada on Wednesday said there was “increased uncertainty” about future rate increases. It recovered to C$ 1.3426 on Thursday.
Sterling dropped to $1.3117 as European Union and UK sources played down the chances of a breakthrough in talks over their Brexit withdrawal deal. Sterling fell to the day’s lows on Thursday, moving further away from an eight-month high hit last week, after British and European Union sources said Brexit negotiations have hit an impasse. Nothing at the moment suggests anything will change in Britain’s Brexit talks with the European Union over the next 48 hours.
The pound fell 0.3% to the day’s lows at $1.3130. Against the euro, it fell by a similar amount to 86.15 pence.
Sources: Reuters, Investing, CNN money
PLEASE NOTE The information above is not investment advice.