The euro dropped over 1 percent last night after the European Central Bank extended their asset purchase program until the end of next year. Comments by ECB President Mario Draghi that cuts to the size of the program should not be viewed as tapering were also a factor.
The ECB said it will reduce its asset buys to 60 billion euros starting in April from the current 80 billion euros. Additionally the ECB will extend purchase by an extra nine months from March. Draghi also stated that the ECB would reserve the right to increase the size of purchases once again if warranted.
The euro had strengthened ahead of Thursday’s decision peaking at $1.0875 in the first minute after the statement before turning lower.
Gold retreated after the dollar rebounded on the back of a decision by the European Central Bank. Gold, which was slightly firmer before the ECB statement, fell as the market focused on the central bank’s move to extend its quantitative easing programme until the end of 2017, beyond the six-month extension expected.
Gold has shed more than 12 percent since its post-U.S. election peak of $1,337.40 on Nov. 9.
U.S. equities closed higher on Thursday reaching fresh record highs as the post-election rally continued following the ECB announcement. The Dow Jones industrial average briefly rose more than 100 points before closing about 60 points higher. The blue-chips index has now posted gains in 19 of the past 23 sessions and 13 record closes since the election.
The S&P 500 closed 0.2 percent higher with financials rising around 1 percent to lead all advancers. The Nasdaq composite advanced 0.4 percent with the three major indexes, along with the small-caps Russell 2000 and the S&P Mid Cap 400, all closing at record levels.
In oil markets, U.S. crude futures for January delivery rose 2.15 percent to settle at $50.84 per barrel. Prices received a boost in part because of solid economic data released from China overnight.
China’s November imports grew 6.7 percent, the fastest pace of annualized growth since September 2013, while exports were up 0.1 percent in dollar-denominated terms. A Reuters poll of analysts had expected exports to fall 5 percent from the previous year, while imports were expected to drop 6.2 percent.
