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Euro Falls as Draghi Comments on Further Easing

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Euro falls by 0.44% to end below 1.1

The euro-to-US-dollar currency pair fell below the support level of 1.1 after comments from ECB (European Central Bank) chief Mario Draghi on further quantitative easing. The euro fell to a low of 1.09 after Draghi’s speech.

The currency pair later rebounded to close at 1.1 at the end of trading on November 3, 2015. This was a fall of 0.44% from the opening level. The fall was less compounded, as the US dollar also had a weak session due to the fall in factory orders.

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Draghi comments on further quantitative easing

On November 3, 2015, Draghi gave the opening remarks at the European Cultural Days 2015 event in Frankfurt. In the course of the speech, he commented that the existing monetary policy will be examined in the December meeting and reiterated his commitment to further easing, if necessary. He played down concerns that a more accommodating policy will invite moral hazard and fall on people’s mentality to save. Spain’s unemployment rate came in at 823,000 for the month of October.

Impact on the market

Looking at the performance of currency-based ETFs linked to the euro on November 3, 2015, the ProShares UltraShort Euro ETF (EUO) ended the day rising 1.0%. EUO is inversely linked to the euro. In contrast, the Guggenheim Currency Shares Euro ETF (FXE), which has a direct relation to the euro, fell by 0.46%.

Looking at European ADRs (American depositary receipts), Dutch leisure goods producer Koninklijke Philips (PHG) and Belgium beverage maker Anheuser-Busch Inbev (BUD) fell by 0.26% and 0.63%, respectively. Finnish company Nokia (NOK) rose by 1.9%.

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