(New throughout after ECB statement)
By Patrick Graham
LONDON Dec 8 The euro fell more than 1 percent
on Thursday after hitting its highest in a month, as the
European Central Bank announced an extension of its quantitative
easing programme till the end of 2017 but also signalled it
would trim monthly bond purchases.
Markets had widely expected the bank to extend the programme
past March but forecasts had tended to centre on a six-month
extension. So despite the cut in the amount of monthly new
money-printing, it was judged a net negative for the currency.
As ECB president Mario Draghi held a news conference to
explain the decision, the euro fell 1.1 percent on the day to
$1.0640, more than a cent below levels seen immediately
before the bank's statement at 1245 GMT.
"The bank has extended its quantitative easing programme
until (next) December, which is more than what the market was
expecting," said Naeem Aslam, chief market analyst at
"However, the bank is going to reduce their firepower after
March and will only be purchasing 60 billion. So you can say
that the bank is tapering in a more dovish way."
The euro had also been strengthening ahead of Thursday's
decision and traders said it had looked exposed to a turnaround
after hitting $1.08 in morning trade. It peaked at $1.0875 in
the first minute after the decision before turning lower.
A stronger greenback has been the consensus since Donald
Trump's election as U.S. president a month ago, even if some
senior bank analysts have begun to question the durability of
the rally going into the holiday season.
"We are still in our camp of pushing the euro lower into the
new year," said Alessio de Longis, a portfolio manager and macro
strategist with Oppenheimer Funds in New York. "If we are right
on the dollar's strength next year then it should break parity."
Other bankers underlined the problems that continue to
undermine a European economic recovery that is still far behind
that on the other side of the Atlantic.
"This decision has been taken when there is still no
evidence of any pickup in underlying inflation or wages," said
JP Morgan strategist Greg Fuzesi.
"It also comes just days after the Italian referendum, when
the ECB could have erred on the side of caution."
(Additional reporting by Jamie McGeever; Editing by Gareth