Euro Weakens on Bets ECB May Lower Rates, Move to Buy Debt


Staff member
Nov 30, 2008
The euro fell against the dollar on speculation the European Central Bank will announce non-standard measures to stimulate the economy following an interest-rate decision today.

The 16-nation currency also declined versus the Canadian dollar and the pound. The yen slid versus the dollar and the euro as gains in stocks dented demand for the Japanese currency as a haven, and the Australian dollar rose to a seven-month high against the U.S. currency as jobs data beat analysts’ forecasts. The ECB, led by President Jean-Claude Trichet, will reduce borrowing costs by a quarter-percentage point to 1 percent today, according to all 53 economists surveyed by Bloomberg.

“A 25-basis point rate cut is a done deal, and only news about unconventional measures will provide momentum for the market,” said Lutz Karpowitz, a Frankfurt-based currency strategist at Commerzbank AG. “It will be hard for Trichet to come to consensus about the new measures. The possibility of quantitative easing will weigh on the euro.”

The euro weakened to $1.3273 at 9:22 a.m. in London from $1.3334 yesterday in New York. The 16-nation currency traded at 131.35 yen, from 131.10 yesterday and 130.72 earlier. The dollar strengthened to 98.96 yen, from 98.31 yesterday.

From Bloomberg News.