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Forex - Euro hits session highs as QE on hold for now

Published 12/04/2014, 09:09 AM
Euro hits session highs as ECB indicates QE on hold for now
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Investing.com - The euro rose to session highs on Thursday after European Central Bank President Mario Draghi indicated that it would not embark on quantitative easing for now, saying the bank would reassess its stimulus program in the first quarter of 2015.

EUR/USD was up 0.77% to 1.2405, recovering from the two year lows of 1.2281 struck earlier in the session.

The single currency bounced higher after Draghi said the ECB would reassess the success of its existing stimulus programs and the impact of weak oil prices on the euro area economy in the early part of next year.

He said the bank could potentially change the size, scale and composition of its existing stimulus programs. The governing council remains unanimous that it will take further measures if necessary, he added.

The ECB substantially revised down its forecasts for growth and inflation and warned that the latest forecasts do not take into account the recent steep drop in oil prices.

The bank now expects the euro zone economy to grow by just 0.8% this year, 1.0% in 2015 and 1.5% in 2016. It cut its inflation forecast for this year to just 0.5% from 0.6% and to 0.7% in 2015 from 1.1%.

The bank left euro zone interest rates on hold at their current record lows of 0.05% earlier Thursday, in a widely anticipated decision.

The euro also gained ground against the yen, with EUR/JPY rising 0.61% to 148.36 from 147.30 earlier.

The U.S. dollar index, which measures the greenback against a basket of six major currencies, was down 0.51% to 88.54, off the five-and-a-half year highs of 89.19 reached earlier in the day.

In the U.S., data showed that the number of people who filed for unemployment assistance in the U.S. fell in line with expectations, underlining optimism over the strength of the labor market ahead of Friday’s nonfarm payrolls report for November.

The Labor Department reported that the number of people filing for initial jobless benefits last week fell by 17,000 to 297,000.

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