The ECB says it is reducing it bond purchase rate. This should cause European yields to rise and put downward pressure on the US$.
The Stoxx Europe 600 SXXP, -0.12% lost 0.3% as the ECB said it would make bond purchases — using its Pandemic Emergency Program — at a “moderately lower” rate than the last two quarters. The index is within 2% of its record high set in August.
Economists had anticipated a step down in bond purchases from the roughly €80 billion per month it’s been making. Ahead of the meeting, the ECB’s chief economist had said any reduction would not be a “pure taper” but a “local adjustment.”
“To us, this is a small victory for the hawks as it signals that tapering will eventually be on the cards,” said Carsten Brzeski, global head of macro at ING.
The euro EURUSD, +0.18% edged 0.1% higher. ECB President Christine Lagarde is due to hold a press conference at 8:30 a.m. Eastern.
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Steven Goldstein is based in London and responsible for MarketWatchs coverage of financial markets in Europe, with a particular focus on global macro and commodities. Previously, he was Washington bureau chief, directing MarketWatchs economic, political and regulatory coverage. Follow Steve on Twitter: @MKTWgoldstein.