Euro plummets after the ECB says it will frontload QE purchases
The euro dropped sharply against the dollar after the European Central Bank's Benoit Coeuré said that the central bank could step up its purchases of eurozone government bonds ahead of the summer lull.
In a speech in London he said: ""We are also aware of seasonal patterns in fixed-income market activity with the traditional holiday period from mid-July to August characterised by notably lower market liquidity. If need be, the frontloading may be complemented by some backloading in September when market liquidity is expected to improve again."
His comments sent the euro plummeting against the dollar:
The ECB is currently buying eurozone government bonds at a rate of €60 billion per month. Coeuré is suggesting that this may be increased in May and June in order for the central bank not to disrupt the market when trading volumes are lower in the summer.
Some have seen this as a response to recent volatility in the German bund market. Over the past month 10-year German government bond yields have spiked to their highest level since October last year - albeit still at historically low levels.
Coeuré, however, dismissed these concerns saying that the "slightly higher purchase volume that market analysts may observe in the coming weeks is therefore unrelated to the recent episode of market volatility."