By Yasin Ebrahim
Investing.com – The euro rose to a 12-week high against the dollar Thursday after the European Central Bank's bold stimulus measures stoked hopes the eurozone could emerge from the Covid-19 recession quicker than many expect.
EUR/USD rose 1.03% $1.0348.
The European Central Bank said Thursday it will increase its pandemic bond buying program by €600 billion ($681 billion) in an effort to cushion the economic blow from the coronavirus pandemic.
The move was "stronger and sooner than markets anticipated," said Esty Dwek, head of market strategy at Natixis Investment Solutions. But should "keep yields low and spreads contained," supporting the recent rally of European assets, Dwek added.
The expansion in monetary stimulus comes as the EU proposed a €750 billion coronavirus fiscal rescue plan, which, if approved by member states, will support some of the hardest-hit regions in the bloc.
The steps forward on a fiscal stimulus package combined with the ECB's rapid policy response could see the eurozone recover more quickly from the Covid-19 recession than the U.S. and U.K., J.P. Morgan Asset Management said.
Euro area activity is "expected to rebound in the third quarter as the containment measures are eased further, supported by favorable financing conditions, an expansionary fiscal stance, and a resumption in global activity," ECB President Christine Lagarde said Thursday.