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Euro ends drop as ECB keeps interest rates, QE policy unchanged
[LONDON] The euro snapped two days of declines after the European Central Bank refrained from expanding its quantitative-easing program and left interest rates unchanged.
The shared currency rose against 13 of its 16 major counterparts and was little changed versus the dollar.
European bonds tumbled this month, pushing yields on German 10-year bunds to their highest since June, amid speculation over when the central bank may begin tapering its 1.7 trillion-euro ($1.9 trillion) QE program.
Of the economists who expected the ECB will change the parameters of its QE plan, only 17 per cent predicted it would do so at this month's meeting, with the majority forecasting it will happen in December, according to a survey by Bloomberg. While inflation has started to pick up in the euro region, the poll conducted Oct. 7-14 suggested the ECB won't start to phase out asset purchases before the second half of 2017.
"Investors expect the October meeting to confirm that the ECB is looking into options to boost the longevity, the size and the scope of asset purchases," Valentin Marinov, head of Group-of-10 currency strategy at Credit Agricole SA's corporate and investment-banking unit in London, said before the announcement.The euro was at $1.0983 as of 12:48pm in London, having weakened more than 2 per cent against the dollar this month.