World Economy

Euro Slides as ECB Halves Stimulus

The euro skidded almost a full cent towards $1.17.The euro skidded almost a full cent towards $1.17.

The euro tumbled and European stocks scored their biggest gains in over six weeks Thursday, as the European Central Bank proceeded with caution on its biggest step yet in unwinding years of loose monetary policy.

The euro skidded almost a full cent towards $1.17 after the ECB said it was halving its stimulus to €30 billion a month, but that any rise in interest rates remained off in the future, Reuters reported.

Moves were compounded by reports that Janet Yellen was no longer in the running for an extension to her term as chair of the Federal Reserve and as Wall Street opened higher before earnings from tech giants Google, Amazon, Microsoft and Intel.

The Dow was flirting with another record high, the S&P 500 gained 6.78 points, or 0.26%, while the Nasdaq was barely budged at 6,567.42 points.

Europe’s main stock exchanges saw their strongest day in more than six weeks. Markets such as Italy, Spain and France rose more than 1% on a sliding euro and debt market borrowing costs.

As well as treading carefully with its stimulus cut, the ECB also took a leaf out of the Fed’s book by promising to keep reinvesting the proceeds from the €2.4 trillion ($2.78 trillion) worth of bonds it has been buying since early 2015.

Britain’s sterling built on strong gross domestic product data to hit a nine-day high before the dollar rebounded.

News website Politico reported that President Donald Trump’s search for the next chair of the US Federal Reserve has been narrowed down to Fed Governor Jerome Powell and Stanford University economist John Taylor, though a White House official later told Reuters “no final decision has been made.”

The dollar steadied at 113.855 yen after hitting a three-month top overnight. It was at similar high against a broader basket of major currencies as the euro fell 0.8% to $1.171.

The Canadian currency also saw a major shift. It was at a three-month low of C$1.281 per dollar after the Bank of Canada sounded more cautious in its policy statement on Wednesday.

Emerging markets were feeling the heat of the dollar’s rise, while oil also slipped following an unexpected increase in US crude inventories and high US production and exports.

Brent crude was down 30 cents at $58.15 a barrel. The global benchmark is not far below the 26-month high of $59.49 hit in late September. US light crude dipped back under $52.

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