The Bloomberg U.S. Dollar Index climbed 0.3% to 1,016.37 after touching 1,022.30, highest since Sept. 13. It gained as much as 0.9%, the most since Aug. 1.
The euro weakened against 11 of its 16 major counterparts, with the yen rallying 1.4% against the shared European currency. Policy makers meeting in Frankfurt today reduced the main refinancing rate by a quarter point to 0.25%. The decision was predicted by three of 70 economists in a Bloomberg News survey.
ECB President Mario Draghi, speaking to reporters in Frankfurt, said weaker growth is a downside risk to inflation.
“The ECB’s surprise decision to lower interest rates will weaken the euro, and this most likely is exactly what the central bank wants,” Daragh Maher, a currency strategist at HSBC Holdings Plc in London, wrote in an e-mailed note. “The ECB’s most potent economic tool to help growth and fight the deflation threat, especially with rates so close to zero, is the exchange rate. Today’s easing marks the first overt step in massaging the euro lower. It certainly will not be the last.”
Italy’s two-year yield fell to the lowest level in more than five months, decreasing 14 basis points to 1.27%. The rate on Germany’s two-year notes dropped five basis points to 0.08%, the least since July.
The Australian dollar declined against all but one of its 16 major peers. Employers cut 27,900 full-time positions last month, the biggest drop since June 2012, the statistics bureau said today. The jobless rate held at 5.7%.
Emerging-market stocks dropped to the lowest level in a month as OTP Bank Nyrt. dragged down Hungarian shares. The Czech koruna tumbled the most on record against the euro as the central bank approved the first currency sales in 11 years.
The MSCI Emerging Markets Index slipped 0.7%, falling for a sixth day. The Budapest Stock Exchange Index slid 1.7% as OTP, Hungary’s largest lender, plunged after the central bank urged the introduction of bankruptcy rules to protect household borrowers. The koruna weakened as much as 4.4%, the worst performance among 31 emerging-market currencies. Brazil’s Ibovespa dropped to the lowest level in a month as Vale SA sank.
Gold fell to a three-week low as U.S. economic expansion fueled speculation the Fed will curb monetary stimulus, and as the unexpected cut in European interest rates sent the dollar surging. Futures for December delivery declined 0.7% to settle at $1,308.50 an ounce on the Comex after touching $1,296, the lowest for the most-active contract since Oct. 17.
Brent crude dropped to the lowest level in more than four months, while West Texas Intermediate declined 0.6% to $94.23 a barrel.