Euro slumps on ECB’s Draghi; US shares lower
LONDON — The euro fell broadly on Thursday after the European Central Bank’s (ECB’s) chief said policy makers will monitor the effects of a rising currency, while US stocks slid after jobless claims and mixed retail sales data.
The ECB left its main interest rate at 0.75%. In a post-meeting press conference, ECB president Mario Draghi said the exchange rate was not a policy target, but was important for growth and price stability.
He also said risks to the economy were on the downside and that economic weakness in the eurozone would likely prevail in the coming months.
"Clearly he does not want to see the euro go much higher," said Boris Schlossberg, MD at BK Asset Management in New York. "There is massive pressure from the French. He is signalling displeasure that it ran up so much."
The euro was last at $1.3421, down 0.7% on the day, with the session low at $1.3419. Against the yen, the euro was down 0.8% at ¥125,58, with the session low at ¥125,53.
Before Thursday’s declines, the euro had risen more than 2% against the greenback so far this year and over 10% versus the yen.
US stocks, after a flat start, fell, with shares of retailers and home builders leading the decline. The Dow Jones industrial average dropped 104.18 points, or 0.74%, at 13,882.34. The Standard & Poor’s 500 Index was down 10.25 points, or 0.68%, at 1,501.87. The Nasdaq Composite Index was down 23.58 points, or 0.74%, at 3,144.90.
"With the S&P 500 Index approaching five-year highs, my sense is that the next leg of any rally will have to come with meaningful revenue growth from a broad swathe of the component companies," said Dan Nathan, cofounder of options analytics firm RiskReversal.com in New York.
The benchmark 10-year US Treasury note was up 6/32, the yield at 1.9407%.
Weekly initial jobless claims dipped by 5,000 to 366,000, with the four-week moving average falling to its lowest level since March 2008, signalling the economy continues to recover slowly.
Several US retailers reported mixed January sales results, as consumers faced a hit to their take-home pay from higher payroll taxes.
The pan-European FTSEurofirst slipped 0.1% to 1,150.79, while MSCI’s all-country world equity index was down 0.6% at 353.24.
"The medium- and long-term positive trend is still intact, although on the short term, we’re turning ‘neutral’; indices are very close to key support levels," said Aurel BGC chartist Gerard Sagnier.
Brent crude rose $0.37 to $117.10 a barrel. US crude fell $0.40 to $96.22 a barrel.