Euro currency exchange traded funds weakened Friday after the European Central Bank vowed to keep key rates at accommodative levels to help the ailing Eurozone economy.
The CurrencyShares Euro Trust (FXE) fell 1.4% Friday. The currency fund is down 0.5% over the past month and 1.6% lower year-to-date.
The euro currency depreciated as much as 0.93% against the U.S. dollar, and is down 1.4% so far this week. The euro is now trading around $1.28, its weakest since late May, after ECB President Mario Draghi provided “unprecedented,” “explicit” forward guidance, pledging to keep rates low for an “extended period of time,” reports Jenny Cosgrave for CNBC.
“An extended period of time is an extended period of time, it is not six months, or 12 months,” Draghi, said in a press conference. “Our exit is very distant.” [Dollar ETF Breakout]
The unexpected forward guidance with a downward bias on interest rates for the foreseeable future weighed on the euro currency Friday.
“I think it is a significant departure,” Jonathan Loynes, chief European economist at Capital Economics, said in the CNBC article. “This is the first time we have seen an explicit longer-term signal, or at least beyond the very short term.”
Looking ahead, ECB’s looser monetary policy could continue to weigh on the euro.
“The remarkable press conference by the ECB in which the ECB engaged in an explicit form of forward guidance in our view marks the beginning of the end of euro resilience,” Peter Kinsella, currency strategist at Commerzbank, said in a Reuters article.
CurrencyShares Euro Trust
For more information on the euro currency, visit our euro category.
Max Chen contributed to this article.
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