The euro skidded lower while stocks climbed higher after the ECB unveiled yesterday a massive stimulus programme and cut interest rates to goose a sluggish eurozone economy.
The ECB took a key interest rate further into negative territory in its first rate cut since 2016 and announced it would resume stimulus via asset purchases at the rate of €20 billion per month and cheap loans to banks.
While the quantitative easing (QE) stimulus amount may have been lower than what some analysts expected, the tone of ECB was more dovish.
Meanwhile, the ECB said it wouldn’t raise interest rates until it saw inflation moving up towards its goal of just under 2.0 per cent over the medium term.
The euro fell more than a cent against the dollar in the moments following the ECB announcement, dropping below $1.10, although it recovered some ground as ECB chief Mario Draghi gave a news conference.
Eurozone stocks climbed, with Frankfurt’s DAX 30 index adding 0.2 per cent and the CAC 40 percent rising 0.3 per cent.
Shares in eurozone banks didn’t universally share in the rally, with some heading lower despite the ECB taking measures to help them cope with negative interest rates. Shares in Deutsche Bank slid 1.0 per cent, while those in French bank BNP Paribas gave up 0.8 per cent.