* ECB unveils 60 bln euro a month QE program
* Euro hits over 11-year low against dollar, 3-month low against yen
* Danish central bank intervenes heavily to weaken crown (New throughout, updates prices, adds comments; changes byline, dateline, previous LONDON)
By Sam Forgione
NEW YORK, Jan 22 (Reuters) - The euro sank to a more than 11-year low against the dollar and a three-month low against the yen on Thursday after the European Central Bank launched a landmark bond-buying program that will pump hundreds of billions into a sagging euro zone economy.
The ECB said it would buy government bonds from this March until the end of September 2016 despite opposition from Germany’s Bundesbank and concerns in Berlin that it could allow spendthrift countries to slacken economic reforms. Together with existing schemes, the new quantitative easing program will pump 60 billion euros a month into the economy.
Investors sold the euro and traders who made money betting against or “shorting” the currency over the past six months in anticipation that the ECB would implement such a program to fight deflation and revive the euro zone economy added to those bets, sending the euro broadly lower.
“The ECB has obviously taken decisive action,” said Dean Popplewell, chief currency strategist at OANDA in Toronto. “What we are seeing is some individuals actually adding to their short positions at these levels.”
The euro fell to as low as $1.13675 against the dollar, the lowest level since Sept. 2003. The currency hit a three-month low against the yen of 134.28 yen and touched a nearly one-week low against the Swiss franc of 0.9843 franc.
Meanwhile, the euro hit a seven-year low against sterling at 75.66 pence.
The ECB’s move underscored the divergence between the Federal Reserve’s path toward tighter monetary policy and looser policies in Europe and Japan, which has fueled a rally in the dollar in recent months.
“To a large extent, the U.S. does appear to be an island of stability amongst much more dovish policy from other developed market central banks,” said Richard Cochinos, head of Americas G10 FX strategy at Citi in New York.
The greenback rose over 1 percent against the franc to as high as 0.87400 franc, marking the dollar’s first advance against the franc in three sessions.
Hours after the ECB decision, Denmark, whose crown currency is pegged to the euro, cut interest rates for the second time in a week in a bid to ward off upward pressure on the currency.
The dollar was last up 0.17 percent against the yen at 118.150 yen. The dollar index, which measures the greenback against a basket of six major currencies, hit over 11-year highs and was last up 1.3 percent at 94.104. (Reporting by Sam Forgione; Additional reporting by London markets team; Editing by Diane Craft)