- POSTED: 06 Jun 2014 06:25
The euro strengthened against the dollar in choppy trade after investors weighed the European Central Bank's moves to bolster fragile Eurozone growth and prevent deflation.
NEW YORK: The euro strengthened against the dollar on Thursday in choppy trade after investors weighed the European Central Bank's moves to bolster fragile Eurozone growth and prevent deflation.
The euro tumbled to $1.35 after the ECB cut its key interest rates to new all-time lows and announced other aggressive measures.
The ECB took the unprecedented step of putting its deposit rate into negative territory for the first time, meaning banks will be charged for depositing their excess cash with the central bank.
ECB President Mario Draghi, at a news conference, also unveiled measures aimed at spurring lending to businesses and consumers, and said "if required, we will act swiftly with further monetary policy easing."
"This package of aggressive measures and the central bank's willingness to do more should have been negative for the euro and it was initially," said Kathy Lien of BK Asset Management in a research note.
But by the end of the North American trading session the euro had recovered all of its losses, finishing in positive territory, she noted.
"While the ECB maintains a dovish bias and has made it clear that they are not done easing, for the time being investors perceive today's announcements to be positive for the Eurozone economy and for the euro."
Investors awaited the US jobs report for May, due to be released Friday. The report, a key indicator of the health of the world's largest economy, is expected to show a decline in job growth to 220,000 from 288,000 in April, lifting the unemployment rate to 6.4 per cent from 6.3 per cent.