Even as the European Central Bank initiates another asset purchasing program (Quantitative Easing), this one worth some €1.1 trillion when all is said and done, the Euro is already feeling the significant bite of the QE scheme and, as a result, earlier struck a 12-year trough versus its main peer, the US Dollar. Earlier this week, the ECB began making sovereign bond purchase in the hopes it could lift the Eurozone out of deflation and jump start economic growth. Analysts say that given the ECB’s efforts, it’s essentially the Euro weakening against everyone else.
As reported at 9:24 am (GMT) in London, the EUR/USD was trading at $1.0585, down 0.91% and close to the session low of $1.0581; since the year began, the Euro has lost 12% of its value versus the Dollar, about half of the total decline of 25% since May 2014. The EUR/GBP dipped to 70.32 pence, a loss of nearly 0.9% while the EUR/JPY was trading at 128.59 Yen, a decline of 0.62%.
Dollar Pushed Higher
The Euro’s decline, of course, has helped to push the US Dollar higher, with the US Dollar Index recently striking an 11-year peak at 99.2440 .DXY. Since summer of last year, the Index has gained nearly 25%, such gains largely being attributed to the divergence in monetary policy between the Federal Reserve and nearly all other major central banks. There is increasing speculation that the Fed might raise interest rates within the next few months, given the recent surge in new US jobs.