Euro drops to two-month low against the dollar as ECB prepares market for more easing. The common currency initially rose, as the ECB kept its key benchmark rate unchanged at minus 0.40%.
Yet, it then reversed its gains and dropped to the two-month low of $1.1109, down 0.3% on the day. The EU currency neared a two-year low it reached in May. The euro has fallen for five consecutive days, and has shed 2.2% against the dollar so far this month.
Investors have interpreted the ECB’s message to mean a rate cut is coming in September, along with other stimulus measures. The central bank seeks to lift low inflation and boost economic growth.
Against a euro weakening across the board before the European Central Bank meets, the pound was flat at 89.225 pence.
ECB President Mario Draghi gave a press conference at 1230 GMT. Draghi said that the bank sees a low risk of a recession in the euro zone, even as he acknowledged a worsening outlook. He added that the risk of an all-out recession was still low.
Weak global growth is leading central banks to ease policy globally, with the Fed viewed as certain to cut rates when it meets next week.
START TRADINGForex – Euro drops as ECB opens the door for easing
The Swiss franc buoyed by expectations of lower rates in the euro zone. The swiss currency rocketed to a two-year high of 1.0963 against the common currency and was last at 1.0982.
Elsewhere, expectations of lower interest rates sent the Australian dollar to a new two-week low of $0.6963.
Sterling traded below $1.25 on Thursday, little changed, after new Prime Minister Boris Johnson filled his cabinet with Brexiteers. He vowed to leave the European Union on Oct. 31 with or without a transition deal. Sterling edged lower by 0.1% to $1.2473.
In commodities, oil rose more than $1 on Thursday amid Middle East tensions and a big fall in U.S. crude stocks. Brent crude were up 68 cents at $63.86 a barrel by 1325 GMT, after hitting a session high of $64.23. WTI crude was up 68 cents at $56.56 a barrel, after hitting a session high of $56.99.
Gold prices held steady on Thursday ahead of European Central Bank’s (ECB) policy meeting.
Spot gold was flat at $1,425.80 per ounce, as of 0724 GMT. U.S. gold futures were up 0.1% at $1,425.60 an ounce. Silver fell 0.3% to $16.54 per ounce, after hitting over a one-year high of $16.64 in the previous session.
PLEASE NOTE The information above is not investment advice.
Sources: Reuters, Investing, CNN money