An exchange traded fund pegged to the euro’s movements against the dollar was little changed in early U.S. trading Thursday after a surprise quarter-point rate cut from the European Central Bank.
The central bank slashed its benchmark rate to 1.25% from 1.5% as the new ECB president, Mario Draghi, starts with bold move.
Draghi will face a difficult task as the central bank wrestles with inflation concerns and Europe’s debt crisis that threatens to tip the region into recession.
“The official annual inflation rate in the Eurozone is 3%, well above the ECB’s target of 2%,” the New York Times reported. “But many economists argue that, with factories producing below capacity and ample data pointing to a downturn, there is little threat of sustained inflation.”
CurrencyShares Euro Trust (NYSEArca: FXE) was flat at last check after the ECB announcement.
The currency fund was higher amid reports Greek Prime Minister George Papandreou was preparing to resign Thursday. Greece’s leader recently called for a referendum on the bailout, throwing the latest financial rescue into question.
The euro ETF is up 3% year to date.
CurrencyShares Euro Trust
