Euro Touches Two-Year Low on Stimulus Expectations

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Euro Touches Two-Year Low on Stimulus ExpectationsThe euro dropped to its weakest level in two years after the European Central Bank President Mario Draghi reaffirmed his willingness to boost stimulus if needed, a move he said had the backing of other policy makers.

The currency plunged 0.7 percent to trade at $1.2397 as of 12:58 p.m. in New York and hit $1.2395, its lowest level since August 2012. The shared currency also plunged 0.5 percent to 142.45 yen, after earlier touching its highest level in 10 months today. The yen retreated 0.2 percent versus the dollar to 114.91. The U.S. dollar was mainly boosted by a report that showed that initial jobless claims fell more than expected.

“The ECB is clearly strengthening its commitment to do more if needed relative to market expectations,” Valentin Marinov, the head of European Group of 10 currency strategy at Citigroup Inc. in London, told Bloomberg News. “That’s euro negative.”

In a press briefing in Frankfurt, Draghi reiterated that the ECB’s bond-purchase program is expected to end after at least two years.

Fresh applications for unemployment benefits fell 10,000 to 278,000 in the week through Nov. 1, the lowest level in three weeks, reported the Labor Department on Thursday. Economists in a Bloomberg survey had expected the claims to total 285,000.

Meanwhile, the Russia’s ruble looked set to post its strongest decline in six years after violence in Ukraine intensified and traders attempted to gauge the central bank’s eagerness to boost the currency.

The currency plunged 3.6 percent to trade at 46.6115 per dollar as of 7:20 p.m. Moscow time, the biggest drop since January 2009. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.

To contact the reporter of this story; Jonathan Millet at john@forexminute.com