Investing.com - The euro rallied against the dollar and the other major currencies on Thursday as fresh stimulus measures unveiled by the European Central Bank after its closely watched policy meeting fell short of market expectations.
EUR/USD jumped 1.98% to 1.0824 after falling to 1.0577 earlier, not far from Wednesday’s seven-and-a-half month trough of 1.0549.
The ECB’s governing council lowered the deposit facility rate to -0.3% from -0.20%, disappointing some analysts’ expectations for a deeper cut to -0.4%.
The main refinancing rate was left unchanged at a record-low 0.05%, in line with market expectations. The central bank also held its marginal lending rate, the rate charged to banks when they borrow from the ECB, at 0.30%.
ECB President Mario Draghi said the bank would also expand its bond-buying purchase scheme beyond the current cut-off point of September 2016 until the end of March 2017, or beyond if necessary.
The ECB extended the range of assets that are eligible for purchase and will now also buy regional and local government debt and will reinvest the proceeds from quantitative easing as bonds mature.
The pace of the QE program is to remain unchanged at €60 billion, disappointing expectations that the central bank would speed up its bond-buying scheme.
The euro strengthened against the other major currencies, with EUR/JPY jumping 1.85% to 133.01 and EUR/GBP advancing 1.16% to 0.7181.
The euro also gained ground against the Swiss franc, with EUR/CHF last at 1.0899 from 1.0797 earlier.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, tumbled 1.16% to 98.88, retreating from Wednesday’s seven-and-a-half month peaks of 100.54.
In the U.S., data showed that initial jobless claims rose more than expected last week, but remained in territory consistent with a strengthening labor market.
The Department of Labor said the number of Americans filing for initial jobless benefits rose by 9,000 to 269,000, slightly more than forecasts for an increase of 8,000.
Investors were looking ahead to Friday’s U.S. nonfarm payrolls report for November for fresh indications on the prospects of a December rate hike by the Federal Reserve.
Remarks by Fed Chair Janet Yellen, who said Wednesday that she was "looking forward" to an interest rate increase, highlighted the diverging monetary policy stance between the Fed and other world central banks.