The euro opened at 1.2632 in New York having failed to sustain its Asian high at 1.2674 with expectations that ECB President Mario Draghi would provide details of the bank's asset purchase plan at his 8:30 am news conference.
The ECB left its three interest rates, the main refinancing, deposit facility and marginal lending, unchanged as expected. There was little notice of Mr. Draghi's comments though the euro dipped to 1.2616 during his press remarks.
He confirmed that the bank would start buying covered bonds in mid-October and asset-backed securities this quarter and would continue doing so for at least two years. He did not offer a definite amount, probably the one item markets were looking for, though he did say the total might fall short of the 1 trillion euros ($1.3 trillion) he had suggested earlier.
The lack of details seemed to cause several bouts of short covering, first to 1.2692, followed by a dip back to 1.2625 and then a long steady climb which peaked at 1.2699 in the early afternoon, the days high.
Soft, but not unexpected U.S. factory orders at 10:00 am may have contributed to the dollar slippage but most it was the lack of clear direction on ECB 'quantitative easing' which precipitated the market's profit taking. As long as the ECB remains committed to its asset purchase liquidity program euro weakness is likely to persist.
The euro closed at 1.2671.
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