Euro falls on ECB's rate moves, end of QE by 2018

EUR  CHF

EUR CHF

The bank said it was pulling the plug on its 2.55 trillion euro stimulus programme but after the Federal Reserve raised USA interest rates for the second time this year on Wednesday the ECB rate promise came as a relief.

While the Fed and the ECB provided much of the week's central bank fireworks, the Bank of Japan produced no surprises at the end of a two-day policy meeting on Friday and looked set to continue its massive asset-buying programme for some time.

But the currency was down 1.72 percent on the week, positioning it to have its biggest weekly loss since November 2016. The euro fell to $1.1658 from $1.1773, and the British pound fell to $1.333 from $1.3358. Euro zone government borrowing costs slid too as traders recalibrated prices for a longer period of sub-zero European Central Bank rates.

By the close of USA markets, the Dow Jones Industrial Average fell 84.83 points, or 0.34 percent, to 25,090.48, the S&P 500 lost 3.07 points, or 0.11 percent, to 2,779.42 and the Nasdaq Composite dropped 14.66 points, or 0.19 percent, to 7,746.38. Hong Kong's Hang Seng index inched up 0.1 percent to 30,473.09 while China's Shanghai Composite Index fell 0.7 percent to 3,020.51.

"In an increasingly uncertain world, US monetary policy remains reassuringly boring", said Stefan Kreuzkamp, chief investment officer at Deutche Bank's asset management arm DWS.

The ECB had probably been too slow to reduce stimulus, Samra added, though recent weaker data showed Europe still had underlying issues.

However the bank's decision may not be as straight-forward as some might think.

Beijing has warned that it was ready to respond.

US DATA: The data for the USA economy released on Thursday were encouraging.

U.S. President Donald Trump is due to unveil revisions to his initial tariff list targeting $50 billion of Chinese goods, and focus was on whether the revisions would ease or further fuel trade tensions.

In Asia, surprisingly soft Chinese retail sales and investment data had also hit sentiment.

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Bank of Japan head Haruhiko Kuroda meanwhile on Friday defended its decision to press ahead with the country's ultra-loose monetary policy.

MSCI's broadest index of Asia-Pacific shares outside Japan lost 1 percent.

In a rare merging of the sports and trading worlds, markets are gearing up for football's World Cup in Russian Federation, where time zone differences mean more matches during European, U.S. and Latin American trading hours than any previous tournament.

A study done during the last one with similarly timed games, the 2010 finals in South Africa, showed trading volumes on share markets dropped by a third on average when matches were on and 55 percent when a market's own team played.

This news siphoned demand away from the "Greenback" once more, with bearishness ahead of the European Central Bank rate decision also keeping the US Dollar down. S&P 500 and Dow Jones and Nasdaq futures were lifted by the ECB's signals and all pointed to slightly higher restart having been lower earlier.

The dollar index against a basket of six major peers gained about 0.2 percent to a two-week high of 94.973, after rallying more than 1 percent the previous day.

The euro EUR= marked its steepest one-day drop against the USA dollar since June 2016, and was down 1.75 percent at $1.1583.

Among commodities, China-sensitive industrial metals sagged but gold and other precious metals made ground.

More evidence also arrived to show that the US economy is improving after retail sales rose the most in six months, and the S&P 500 was on pace for its fourth gain in the last five days.

OIL: Benchmark U.S. crude rose 5 cents to $66.94 per barrel in electronic trading on the New York Mercantile Exchange.

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