Euro is dropping today, thanks in large part to the disappointment over Mario Draghi‘s policy announcement from the ECB. Many had expected the ECB to announce measures to help ease the sovereign debt. At the very least, there were expectations that the ECB would buy Spanish and Italian bonds. However, Draghi’s “whatever it takes” rhetoric might just that: Rhetoric.
Instead of announcing any changes, the ECB is staying the course. That is sending the euro lower against its major counterparts as concerns about what’s next for the 17-nation currency zone weigh. Spanish and Italian bond yields surged on the disappointing announcement, and the euro dropped.
It’s all about risk aversion now. Once again, eurozone leaders have proved themselves all talk. The euro had been resurgent on Draghi’s earlier vows to save the euro, but now Forex traders are left to wonder whether or not eurozone leaders really have it in them to save the currency from complete disaster.
Other world markets are also lower on the news, and the gains by the yen are prompting speculation of more intervention from Japanese officials to keep the yen weak.
At 15:49 GMT EUR/USD is down to 1.2143 from the open at 1.2225. EUR/GBP is down to 0.7827 from the open at 0.7870. EUR/JPY is down to 94.9640 from the open at 95.8910.
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