The euro continued to sell-off today, reaching a fresh 11-year low against the dollar as the week’s losses were the most in three years. The single currency fell to 1.1115, smashing through psychological levels of support at 1.13 and 1.12 as it lost as much as 2.21% throughout the day. Market participants had expected the ECB to embark on a full scale quantitative easing programme following the successful implementation of stimulus in the US, however, judging by the protracted moves in the euro both yesterday and today it seems the majority of investors were still caught on the back foot and were stunned by just how extensive the asset purchasing programme would be. With the ECB committed to buying €60bn worth of public sector bonds a month until at least September 2016, implying a total purchase price well in excess of €1tn, almost double what the market seemed to have priced in, we could see the euro trade under continued pressure in the near term as investors shift funds towards higher yielding assets while the longer term outlook for eurozone stocks remains bullish.
Spot gold prices traded back below $1,300/oz today as investment demand for the safe haven pared back after yesterday’s ECB meeting. The precious metal traded towards $1,284/oz earlier with SPDR Gold Trust holdings pulling back from a twelve week high as investors went on the lookout for better returning assets. Gold prices have rallied over 10% since the start of the month recovering the majority of the losses experienced throughout the second half of last year even as a stronger dollar has seen substantial gains across other commodities capped in recent weeks. The dollar index surged to a fresh high of 95.481 against a basket of major currencies, gaining significant ground against the euro and the yen as the greenback gained favour among investors after yesterday’s positive US data releases and ECB press conference.