The euro tumbled to a
two-month low after European Central Bank President Mario Draghi gave a
crowd-pleasing performance at his policy address in Malta, leaving
investors in little doubt he’s ready to deploy more monetary stimulus to
boost the flagging economy.
The shared currency
fell versus all of its 16 major counterparts after Draghi said officials
will reexamine the scope of their quantitative-easing plan in December.
The bond purchases, originally due to end next September, will continue
until the ECB sees a sustained increase in the inflation outlook, he
told reporters. Policy makers also discussed a further cut to the bank’s
negative deposit rate, he said.
The euro’s decline
vindicated options traders who had added to wagers for the shared
currency to reverse its recent rally against the dollar, and who boosted
them even more after Draghi’s remarks.
The shared currency
dropped as much as 2 percent to $1.1109, the lowest level since Aug. 18,
and was at $1.1114 as of 3:05 p.m. New York time. It slipped 1.3
percent to 134.17 yen. Stimulus tends to weaken a currency by expanding
the monetary base.
Source: Bloomberg
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