The surprise decision by the European Central Bank to cut interest rates means there’s now about an even chance that the euro, this year’s best-performing major currency, will erase all of its gains in a matter of months.
U.S. stocks and commodities slid as faster economic growth spurred concern the Federal Reserve will scale back stimulus sooner than expected, while Twitter Inc. surged in its trading debut. The euro fell, while the region’s bonds rose, as the European Central Bank cut interest rates.
The euro slid the most in more than a year versus the dollar as weaker-than-forecast economic data for the currency region fueled speculation the European Central Bank will cut interest rates as soon as at its meeting next week.
The euro slid the most in six months versus the dollar after the inflation rate in the region unexpectedly cooled, fueling speculation the European Central Bank will cut interest rates to spur the economy.
The pound’s rally has pushed the currency to about its highest valuation this year relative to strategists’ forecasts, suggesting its world-beating gains may prove unsustainable given the state of the U.K. economy.
The foreign-exchange market is signaling more pain ahead for currencies that benefit from a sustained global recovery, five years after the onset of the worst financial crisis since the Great Depression.
The pound posted its biggest weekly slide versus the euro since May as investors bet Bank of England Governor Mark Carney will use a speech next week to affirm his intention to hold borrowing costs at an all-time low.