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Euro Falls On Negative Deposit Rate Chatter

ByBenzinga
AuthorBenzinga
Published 11/22/2013, 12:22 AM
Updated 05/14/2017, 06:45 AM
FTNMX301010
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The euro slipped to $1.3427 at 6:25 GMT on Thursday morning as investors focused their attention on central banks for clues about economic future economic policies.

A news report on Wednesday claimed that the European Central Bank was considering cutting it's deposit rate to -0.1 from its current level of zero. The report came shortly after ECB President Mario Draghi remarked that the bank was ready for negative rates if needed. Following the news, the common currency slipped since a move like that would flood the markets with euros.

The ECB's rumored moves stood in stark contrast to speculation surrounding the US Federal Reserve's future plans. The taper tug-of-war continued this week after FOMC minutes presented a conflicting viewpoint from that of incoming Federal Reserve Chair Janet Yellen. Reuters reported that the minutes showed several of the ECB's board members were confident about the US' economic progress and indicated that the bank could start cutting back on its stimulus spending at one of its future meetings.

The news sparked a dollar rally as investors swayed from predicting a March 2014 taper to the possibility of the pull back beginning in December.

Moving forward all eyes will be on US jobs data for November for an idea of the direction the Fed is heading. Although the US central bank's taper plans have been anything but clear since the moment they were announced, Fed officials have been consistently saying that jobs data is closely tied to the bank's willingness to cut back on its quantitative easing.

BY Laura Brodbeck

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