The euro hit back from losses earlier on Wednesday to climb sharply after suggestions that the European Central Bank’s policy meeting on Thursday will see President Mario Draghi announce a new wave of government bond buying in order to combat the eurozone debt crisis.
The ECB announced in August that it would launch a fresh bon buying initiative in order to cut the borrowing costs of financially stricken Spain and Italy, but only if the two member states sought the help of the region’s rescue fund and agreed to strict conditions.
The common currency began to rebound from earlier losses shortly after New York trading commenced, on the back of Bloomberg’s revelation that Draghi would announce a plan which would include an unexpected unlimited purchasing of government bonds. Experts had been of the opinion that the central bank would refrain from announcing the scale of its bond purchasing due to Germany’s recent criticism of the programme.
The single currency last stood at 0.3 per cent up on the day at $1.2604, moving back towards last Friday’s two-month peak of $1.2636. a number of investors were already hedging bets that the ECB would reveal details of the bond buying initiative after the policy meeting in Thursday, but the majority remained catious.