Despite an interest rate cut by the European Central Bank on Thursday, which was widely expected, the euro slumped across the board, falling to a five-week trough against the dollar, and to all-time lows versus the Aussie and the kiwi. Global equity markets also fell regardless of the fact three of the world's largest central banks took new stimulus steps.
On Thursday, the Bank of England announced that it would restart its bond buying program, adding an additional £50 billion in asset purchases. Almost simultaneously the People's Bank of China cut its one-year lending rate by 31 basis points to 6 percent. The ECB rate cut followed shortly, but markets and the euro were spooked as the ECB failed to deliver bolder moves and President Mario Draghi painted a bleak economic outlook.
The move by China also raised fears that next week's growth data out of the world's second largest economy may turn out to be far worse than expected, which would give further evidence of a global economic stagnation.
dropped to 1.2364, a five-week low, as forex investors were unconvinced that the steps taken by the ECB in yesterday's meeting will be enough to lift Europe out of its woes. An ADP private employment report published yesterday was better than expected, which lifted hopes that Friday's non-farm payrolls figures may also come in better than initially expected and also supported the greenback.
The Aussie also hit a fresh two-month high versus the greenback, and a new all-time high against the single currency. jumped to 1.0329 shortly after the announcement of the BoE's new QE program and the PBoC's rate cut. fell to 1.2022 on Thursday, a drop of more than 200 points off its session highs.
The US jobs report, scheduled for 14:30 CET today will provide more clues on the impact the euro zone's debt crisis has had on the US economy and whether the Federal Reserve might also have to embark on fresh monetary easing.