The EUR/USD dropped to its lowest in 26 months on Thursday, Nov. 6, after European Central Bank President Mario Draghi reiterated the financial institution will use any tools available to help jump-start growth in the euro zone.
The currency pair started moving lower immediately after Draghi began speaking at a press conference following a meeting of the ECB’s governing council, reaching as little as 1.2394 before paring some of these losses to hit 1.2408, according to MarketWatch. Late in the previous session, the currency pair was trading at 1.2487.
The ECB’s president elaborated on the steps his organisation was willing to take, emphasizing that the existing regimen of bond purchases would push the central bank’s balance sheet to heights it has not seen since the start of 2012, the media outlet reported.
He added that the current bond-buying program will last at least another two years, according to Bloomberg. In addition to these measures, the central bank has been offering long-term loans with low borrowing costs and slashing interest rates in an effort to put upward pressure on prices. Amid these efforts, the EUR/USD has plunged 9.6 percent year-to-date.
Valentin Marinov, London-based head of European Group of 10 currency strategy at Citigroup Inc., told the news source the ECB “is clearly strengthening its commitment to do more if needed relative to market expectations.”
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This move could place downward pressure on the common currency, he added.
Another piece of news that was released on Nov. 6 – and potentially helped push the EUR/USD lower – was the latest jobless claims figures from the U.S. Department of Labor.
This data showed that during the week ending Nov. 1, these initial applications for unemployment benefits totaled 278,000, 10,000 lower than the previous period. The weekly figure was less than the 285,000 figure predicted by economists participating in a Reuters poll.
The four-week moving average claims, which many think of as being a more stable indicator of the labor market’s strength, was 279,000 during the period, 2,250 less than the prior week’s revised average. This represented the lowest reading for this particular measure since April 2000.
As a result of the recent claims activity, these applications have held below 300,000 for eight weeks in a row, according to Reuters. In addition, a separate survey conducted by the media outlet predicted that the Labor Department’s monthly job figures for October – which are scheduled for release on Friday, Nov. 7 – will show the nation’s employers added 231,000 positions.
This forecast came after an additional report released on Wednesday, Nov. 5 projected that the country’s employers bolstered payrolls by 230,000, the media outlet reported. If this prediction comes true, that will mean seven straight months where the nation added more than 200,000 roles.
Investors who trade forex might benefit from knowing about the EUR/USD’s decline to its lowest in more than two years on Nov. 6. Doing some research into the various developments that surrounded the depreciation in this particular currency pair might help them make better-informed decisions.
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