The euro fell to an 11-1/2-year low against the dollar yesterday as US and eurozone bond prices rose, after the European Central Bank spelled out its one trillion-euro stimulus plan that begins next Monday.
European stock prices were supported by the ECB's latest effort to jump-start the struggling eurozone economy, while US equities were little changed as investors awaited direction from the government's monthly labour report due out today.
ECB President Mario Draghi outlined the central bank's quantitative easing programme at a press conference following a scheduled policy meeting. He left the door open for more bond purchases beyond September 2016.
“Mr Draghi is showing that the ECB is determined to continue until it gets the results it needs. They are perfectly aware that they cannot afford to fail,” said Mauro Vittorangeli, a senior fixed income portfolio manager with Allianz Global Investors in Paris.
The ECB upgraded its growth outlook for the eurozone to 1.5 per cent for 2015. That still trails a 2.8 per cent pace seen for the United States.
Brent oil prices hovered near $61 a barrel in the absence of a deal with world powers on Iran's nuclear programme. An agreement could loosen restrictions on Iran to sell its oil, exacerbating a global supply glut. The rise in European stock prices was limited by the prospect of an economic slowdown in China, with mining companies falling on the outlook.
Beijing announced a 7 per cent growth target for the year and signaled that the lowest rate of expansion for a quarter of a century is the 'new normal.'
The euro slumped below $1.100 for the first time since September 2003. It was last down 0.6 per cent at $1.1014. Against the yen, it was down 0.1 per cent, at 132.38 yen .
In contrast, the dollar strengthened to an 11-1/2-year peak against a basket of currencies ahead of today's US payrolls report. If the data shows further improvement in wages and job growth, it will reinforce an expectation that the US Federal Reserve will raise interest rates later this year.
The dollar index was up 0.5 per cent at 96.437.
Eurozone bond prices rose, while US debt prices held steady. Benchmark 10-year US yield was 2.12 per cent, while its Italian and Portuguese counterparts and slipped to record lows.
The Dow Jones industrial average was up 1.22 points, or 0.01 per cent, to 18,098.12, the S&P 500 was down 1.45 points, or 0.07 per cent, to 2,097.08, and the Nasdaq Composite was up 0.50 points, or 0.01 per cent, to 4,967.64.