Euro is gaining ground today as concerns about an ECB rate cut are eased — at least for the time being. The decision of the Federal Reserve to keep the asset purchase program in place in the United States has helped money markets, and made things a little easier for policymakers in the eurozone.
The surprising decision of the Federal Reserve to keep its asset purchase in place without tapering has impacted markets all over the world. Prior to the decision, money market rates in the eurozone rose on the expectations of tighter money supply in the United States. Even though Mario Draghi insisted that such levels were unnecessary, they still rose, leading to speculation that the ECB would have to cut its interest rate in October.
However, this surprise from the Fed means that the ECB might not have to cut its rate after all. The news of continued liquidity in the United States sent money market rates lower in the eurozone, and the 17-nation currency is getting a bit of a boost today as a result.
At 14:25 GMT the euro is higher against most of its major counterparts. EUR/USD is up to 1.3562 from the open at 1.3521. EUR/GBP is up to 0.8438 from the open at 0.8375. EUR/JPY is up to 134.9210 from the open at 132.4350.
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