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Forex - Euro extends gains after ECB holds; Draghi eyed

Published 04/21/2016, 07:57 AM
Updated 04/21/2016, 07:57 AM
© Reuters.  Euro pushes higher against dollar after ECB holds, Draghi ahead

© Reuters. Euro pushes higher against dollar after ECB holds, Draghi ahead

Investing.com - The euro extended gains against the dollar on Thursday after the European Central Bank kept interest rates unchanged at record lows as investors looked ahead to the bank’s post policy meeting press conference.

EUR/USD was last at 1.1329 up from 1.1317 earlier, holding well below Wednesday’s highs of 1.1387.

EUR/JPY was at 124.30, little changed from 124.27 ahead of the announcement.

The governing council of the ECB held the benchmark interest rate for the euro zone at a record low zero, in a widely anticipated decision.

The deposit rate, charged on commercial bank deposits at the ECB, remained at -0.4% and the marginal lending facility, which banks pay to borrow from the ECB, was unchanged at 0.25%.

The ECB also left its bond-buying program unchanged at €80 billion per month.

The ECB unveiled a raft of new measures last month, including interest rate cuts, additional monthly bond purchases and more cheap loans to banks, but the euro rallied after ECB chief Mario Draghi indicated that further rate cuts may not be necessary.

Investors were now turning their attention to the bank’s post policy meeting press conference, with Draghi expected to react to recent criticism of the ECB’s ultra-loose monetary policy from German officials.

German Finance Minister Wolfgang Schaeuble has said that negative interest rates are hurting Germany’s banking system and are in part to blame for the rise of the right-wing anti-immigration party Alternative for Germany.

The ECB has eased policy aggressively, cutting rates deeper into negative territory and expanding its asset purchase program in a bid to spur price growth in the euro area.

The euro was steady against the pound, with EUR/GBP at 0.7874.

In the U.K. data on Thursday showed that retail sales fell in March while government borrowing rose more than forecast.

The weak data added to indications that economic growth slowed in the first quarter.

Sterling was almost unchanged against the dollar following the data, with GBP/USD at 1.4339.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, slid 0.21% to 94.34.

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