The EUR/USD surprised traders and rebounded after the ECB moved to inject stimulus into the eurozone by adding a lot of new programs and venturing into negative interest rates. The euro jumped the most in three months against the dollar one day this week amid signs of limits to European Central Bank policies that would depreciate the exchange rate. The ECB cut its deposit rate to minus 0.1 percent, becoming the first major central bank to take one of its main rates negative. In a bid to get credit flowing to parts of the economy that need it, policy makers also opened a 400 billion-euro ($546 billion) liquidity channel tied to bank lending, and officials will start work on an asset-purchase plan. While conceding that rates are low, the ECB President Mario Draghi also signaled his willingness to act again.
The US currency gained against a basket of peers as an employment report matched forecasts, bolstering speculation that the Federal Reserve will keep reducing its month bond-buying. The currency market’s views on central bank stimulus drove a measure of volatility to the lowest ever.
Hedge-fund managers and other large speculators added to bets the euro will weaken against the dollar to the most since July. The difference in the number of wagers on a decline in the common currency, compared with those on a rise — so-called net shorts — was 33,025 on June 3, compared with 16,633 a week earlier.
Historical: From 2011 to Present
Highest: 1.4577 USD on Jul 03, 2011
Average: 1.3165 USD over this period.
Lowest: 1.2041 USD on Jul 24, 2012
