The euro weakened against most of its major counterparts as the ECB left its benchmark interest rate at a record-low 0.75% and Draghi said the economic recovery was subject to “downside risks.”
“Our monetary policy stance will remain accommodative for as long as needed,” he said at a press conference in Frankfurt. “In the coming weeks, we will monitor very closely all incoming information on economic and monetary developments and assess any impact on the outlook for price stability.”
The currency fell earlier after Markit Economics said its index of services output in the region declined to 46.4 in March from 47.9 in February. That’s below an initial estimate of 46.5 published March 21. A reading below 50 shows contraction.
“The rhetoric from Draghi is generally downbeat,” said John Hardy, head of currency strategy Saxo Bank A/S in London. “It’s risk off and German bunds are rallying which tends to support the dollar.”
The pound rose for the first time in five days against the euro as the Bank of England kept its asset-purchase target at 375 billion pounds ($567 billion) in a decision that was forecast by 34 of 37 economists in another Bloomberg survey.
Sterling was also boosted after an industry report showed Britain’s services output unexpectedly accelerated in March.
“The services data was a bit better than expected, which has given sterling a bit of gumption,” said Jane Foley, a senior foreign-exchange strategist at Rabobank International in London. “No-one really expected a policy move today but there may have bit a bit of relief that there wasn’t an increase in the asset- purchase target. However, that doesn’t mean its completely off the table.”
Sterling gained 0.5% to 84.51 pence per euro and was little changed at $1.5117.
South Korea’s won slid to a six-month low against the dollar as the risk of conflict with North Korea escalated.
“North Korea is heightening its threats day by day and that risk factor is having a negative impact on South Korean financial markets,” said Jeon Seung Ji, an analyst at Samsung Futures Inc. in Seoul. “Rising tension is prompting foreign investors to sell more Korean stocks, weakening the currency.”
The won fell 0.5% to close at 1,123.71 per dollar in Seoul after touching 1,125.50, the weakest since Sept. 13. The currency slumped 5.3% in the past three months.