European bank head Draghi says he’s ready to do more

After the jobs report, the dollar rose against the euro as one euro bought $1.0883 compared with $1.0940 ahead of the data, leaving the greenback up 0.5% for the session. They were left with egg on their face – and less cash in their pockets – after European Central Bank (ECB) president Mario Draghi disappointed them over the scale of Europe’s €60bn (£43.2bn) a month bond-buying programme. The fear about an interest rate hike by the US Federal Reserve also led to subdued sentiments on the domestic bourses.

The ECB move triggered a spike in the euro that caught investors by surprise, forcing them to shift positions and that affected many asset classes. But U.S. stocks were poised to open higher.

German and other eurozone government bond yields made their biggest jump in months and for shorter term two-year German bonds it was the sharpest rise since March 2011.

The Dow Jones industrial average fell 252.01 points, or 1.42 per cent, to 17,477.67, the S&P 500 lost 29.89 points, or 1.44 per cent, to 2,049.62 and the Nasdaq Composite dropped 85.70 points, or 1.67 per cent, to 5,037.53.

The dollar slipped below ¥123 in Tokyo trading on Friday due to selling triggered in part by its plunge against the euro after the European Central Bank’s latest monetary easing steps failed to meet high investor expectations. The Deutsche Boerse Index (DAX) dropped by 3.58 per cent on Thursday, while France’s CAC 40 Index fell by the same amount.

Before the European Central Bank underwhelmed no less than €100 billion of eurozone corporate debt had seen its yield turn negative. The benchmark United States 10-year note yield jumped 13 basis points on Thursday, the most since February 6. In comments Wednesday, Fed Chair Janet Yellen gave an upbeat assessment of the economy’s progress since the Fed’s last meeting in October, describing it as in line with its expectations for the labour market and inflation.

The euro recorded its largest weekly gain since May on Friday, despite losing ground after official data showed the US economy added more jobs than market strategists expected.

Economists forecast that USA employers created 200,000 jobs in November, and the unemployment rate remained steady at 5 per cent.

Indeed, business activity in the euro zone picked up at its fastest pace since mid-2011 last month, third quarter economic growth was running at a respectable 1.6 per cent and lending is increasing at the quickest rate in four years. Instead, it will keep production steady in order to maintain its market share. Its rate cut of 0.10 percentage point, to -0.30%, was smaller than a 0.15 to 0.20 percentage point cut many traders expected.

Moving away from interest rate decisions, the biggest factor affecting inflation has been the determination of Saudi Arabia to drive oil prices lower, regardless of objections from non-Arab OPEC members.