The dollar soared high on Friday, staying on track for its weekly gains, while the euro and the pound both plummeted, with the former dipping to its three-month low following the European Central Bank’s announcement of the extension of its bond purchases.
The dollar index, a measure that gauges the dollar’s strength against a basket of six other major currencies, gained 0.2 percent to 94.800.
The rise in the dollar was primarily attributed to the ECB’s decision to prolong its bond-buying scheme for 9 months until September 2018.
The Bank added that it would start reducing its monthly purchasing by half to 30 billion euros, equivalent to $34.90 billion, starting January.
Following the announcement, the euro plummeted 0.15 percent at $1.1633. This comes after a touch-down at $1.1624, its lowest since July 26. For the week, it was down 1.3 percent.
Moreover, the dollar was further pushed up by the vote released on Thursday that cleared a procedural path for a Republican tax bill.
Investors are also keeping close tabs on US president Donald Trump’s search for the next Federal Reserve chief. Among the candidates are Jerome Powell, the current Fed Governor, and John Taylor, an economist at Stanford University.
Meanwhile, USD/JPY exchanged at 114.13, which is a 14-percent climb. AUD/USD traded at 0.7659, a 0.01-percent slip.
In Japan, September national core CPI climbed 0.7 percent from last year, marking its 9th rising month.
The pound has also plummeted 0.3 percent to $1.3124, as the Government on Thursday announced that its key piece of Brexit legislation would be discussed and debated over on November 14 and 15.
The debate is the next step in the somewhat maze-like lawmaking process, which is believed to test Prime Minister Theresa May’s authority.
“Monetary stimulus still necessary”
Mario Draghi, who is the ECB’s chief, said that “an ample degree of monetary stimulus remains necessary,” while the Bank still awaits some signs of inflation maintaining an upward trend.
This cautious decision sports a high contrast against the Federal Reserve’s intention to raise rates in December, aiming to stabilize its monetary policy.
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