The euro gained modestly on Friday morning after falling to a four month low on Thursday following the European Central Bank’s decision ease further in order to fight the region’s falling inflation figures.
The common currency traded at $1.3642 at 8:00 GMT on Friday morning as investors looked ahead to US non-farm payrolls data.
The ECB elected to use a multi-faceted easing package which surprised investors with its boldness as most didn’t expect the bank to intervene with such a heavy hand. The ECB decided to lower its main interest rates, including its deposit rate which is now below zero.
The decision marks the first time a major central bank has employed a negative deposit rate, something that will effectively charge banks for holding on to large cash reserves. In addition to the new deposit rate, the ECB is planning to offer cheap loans linked to business lending to the region’s banks.
Following the meeting, bank President Mario Draghi also described the bank’s plans to create a new program of direct purchases and loans in order to kick start the region’s stalling recovery. The plans, though well received, fell short of the huge asset purchase programs seen in both the US and the UK.
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