The euro on Friday jumped to a three-month high after the European Central Bank (ECB) expanded its stimulus more than expected to prop up an economy dealing with its worst recession since World War II.
The ECB’s move supported appetite for riskier currencies, lifting the Australian dollar to a five-month high and the British pound above peaks hit in the past two months.
The central bank increased its emergency bond purchase scheme by a bigger-than-expected 600 billion euros (US$677.49 billion) to 1.35 trillion euros and extended the scheme until the middle of next year.
The euro rose 0.25 percent to US$1.1367, its loftiest level in almost three months. On the week, the single currency has risen 2.4 percent and is set to clinch a third straight week of gains.
Investor confidence in the currency has also grown after Germany last month threw its weight behind the idea of a EU recovery fund.
“Recent actions by both the EU Commission, as well as the ECB have reduced tail risks around the euro area economic outlook,” said Zach Pandl, cohead of global foreign exchange at Goldman Sachs in New York.
“Europe’s main challenge is its incomplete fiscal policy architecture. However, European institutions are making important changes to correct those weaknesses, and those include the ECB’s bond purchases, as well as the EU recovery fund proposal, which we think will go a long way toward improving fiscal policy coordination in the euro area,” he added.
Against the Japanese yen, the common currency changed hands at 124.43, a 13-month high.
The Swiss franc, another safe haven currency, hit a five-month high of 1.08645.
The US dollar index is on course for its third consecutive week of losses at 96.510, near its lowest in nearly three months.
The greenback firmed to ￥109.33, flirting with its highest levels in two months.
The Hong Kong dollar rose to 7.7500 per US dollar for the first time since May 21, prompting the Hong Kong Monetary Authority to intervene in the market.
In Taipei, the New Taiwan dollar rose against the US dollar, gaining NT$0.193 to close at NT$29.839, up 0.64 percent from last week’s NT$30.032.
Additional reporting by staff writer
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