EUR/USD
The euro fell against the other major currencies on Thursday after the European Central Bank launched a large scale quantitative easing program in an attempt to combat slowing growth and inflation in the euro area. ECB President Mario Draghi said it will make monthly purchases of €60 billion per month, starting in March and continuing until late 2016. The €1.2 trillion program will substantially increase the ECB’s balance sheet. The move should also strengthen demand and support money and credit growth and help return inflation back to the bank’s 2% target, he said. Draghi acknowledged the action the ECB took last year was insufficient to ward off the threat of deflation in the region. He also said that the risks to the euro area recovery will remain to the downside but today’s action should bolster the outlook.
GBP/USD
The dollar climbed to fresh 12-year highs against the pound on Thursday, after the European Central Bank announced a large scale quantitative easing program. Earlier Thursday, the Office for National Statistics said that U.K. public sector net borrowing rose to £12.47 billion last month from a revised £11.73 billion in November, whose figure was revised from a previously estimated £13.41 billion.
USD/JPY
The Japanese yen showed more volatility on Thursday as China moved to aid liquidity in the market and investors took positions ahead of a European Central Bank meeting expected to ease policy further. On Wednesday, the Bank of Japan maintained the size of its stimulus program and reiterated its pledge to increase base money at an annual pace of ¥80 trillion through buying government bonds and risk assets.
