The euro fell to its lowest level against the dollar in two years today after much-anticipated comments by European Central Bank (ECB) chief Mario Draghi disappointed markets.
The currency dipped below $1.24 and fell to £1.27, before rallying slightly. Although European stocks spiked immediately after the speech, Germany's Dax closed down 0.92 per cent, while the FTSE 100 edged up 0.18 per cent by the closing bell.
While Draghi failed to announce the quantitative easing (QE) programme markets had hoped for, he did drop hints that the ECB would introduce further measures "if needed".
He also reiterated a previous commitment to increase the size of the bank's balance sheet by €1trillion (£782bn) - a brave choice when other central banks, such as the US' Federal Reserve, are shrinking their balance sheets. But the fact he repeated the €1trillion figure suggests Draghi has the support of the bank's governing council.
Jasper Lawler, a market analyst at CMC Markets, said investors were "unconvinced":
Markets put the two messages together to find the desired results; more stimulus if needed and a likelihood of lower growth means more stimulus is likely. The trouble is until the stimulus comes, if it ever does, the European economy is expected to weaken in the meantime and could well pull shares down with it.
Mr Draghi will find it a very tall order to reach agreement to press ahead with full QE; the working difficulties expressed in the press only reinforce our view on this. We do not see today’s ‘moves’ by Mr Draghi as providing evidence of a shift in the mood music on the governing council. Indeed, our central view remains that the governing council will ‘get by’ without deploying QE.