CurrencyShares Euro Trust (NYSEArca: FXE) was up 1% in early U.S. trading Thursday after the European Central Bank kept interest rates unchanged while sentiment on the currency was also boosted by a solid government bond auctions in Spain and Italy.
FXE is designed to follow the movement of the euro against the U.S. dollar. The currency ETF saw heavy trading volume Wednesday as traders positioned for the ECB rate decision.
“The knee-jerk move higher seems consistent with the view that part of the market was betting on ECB cutting rates and this was weighing on the euro,” said Valentin Marinov, foreign currency strategist at Citigroup, in a Financial Times report.
“The market is awaiting signals from the ECB over how serious it is on delivering further near-term policy easing,” added Alexandre Dolci, FX strategist at BBVA, in a Reuters article.
During a press conference Thursday, European Central Bank President Mario Draghi said he’s hopeful the Eurozone economy will improve in 2013.
Draghi said the euro-area economy will slowly recover this year as the region’s bond markets stabilize after three years of turmoil, Bloomberg News reports.
“We have signs that fragmentation is being gradually repaired,” the ECB president said.
Still, Draghi “warned against declaring a quick end to the euro zone’s problems Thursday, saying that the economy wasn’t out of the woods yet and that the repair of the financial system still had a long way to run,” Dow Jones Newswires reported.
Draghi appeared to keep a modest bias toward an easier monetary policy, saying that “the risks surrounding the outlook for the euro area remain on the downside.”
He said that it was still too early to think about exiting from the ECB’s extraordinarily easy policy, because the economy remains too weak, according to the Dow Jones report. At the same time, he hailed the “considerable” improvement in financial-market conditions in recent months.
CurrencyShares Euro Trust