The euro rose sharply against other majors on Thursday in New York as investors bet the recent moves by the European Central bank will not be enough to devalue the common currency.
At its meeting in Frankfurt, the Governing Council, the policymaking body of the ECB, reduced the interest rate by 25 basis points to 1.00%. The decision was in line with expectations.
In the press conference that followed the announcement, the central bank chief Jean-Claude Trichet said the central bank will proceed with its enhanced credit support approach and will conduct liquidity-providing longer-term refinancing operations with a maturity of 12 months.
Trichet also announced that the central bank will buy euro-denominated covered bonds issued in the euro area. He said the program is expected to be worth around EUR 60 billion. Technicalities will be decided in the next meeting.
The euro extended its monthly high against the dollar to 1.3469 in mid-morning trading. The European currency later eased back towards 1.3400.
The U.S. Labor Department said initial jobless claims, a closely-watched gauge of layoffs, dropped to 601,000 for the week ended May 2. This was down 34,000 from the previous week's revised total of 635,000.
The euro turned to the upside against the pound after earlier hitting a 2 1/2-month low of 0.8772. The European currency rose to around 0.8930 in the late morning.
The Bank of England left its key interest rate unchanged at 0.5%. Further, the central bank announced that it is continuing with its scheme of asset purchases financed by the issuance of central bank reserves and decided to increased its size by GBP 50 billion to a total of GBP 125 billion.
The euro climbed to a 3 1/2-week high of 133.55 against the Japanese yen, moving above near-term resistance.
Japanese monetary base grew 8.2% in April to 95.62 trillion yen, following a 6.9% annual gain in March. According to a Bank of Japan report, seasonally adjusted monetary base was up 17.4% year-on-year in April.
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