Summary Dollar rose against euro after the ECB slashed its key interest rate to a new record low.
WASHINGTON (AFP) - The US dollar surged Thursday after the European Central Bank cut its base interest rate to a record low, saying it was necessary to fight deflationary pressures.
The ECB slashed its key rate by a quarter point to 0.25 percent, with its president Mario Draghi warning that the 17 countries that share the euro "may experience a prolonged period of low inflation".
At 2200 GMT the euro was at $1.3414, compared to $1.3517 late Wednesday.
The euro immediately sank after the rate announcement, falling to $1.3295, before pulling back as markets saw some weakness in the 2.8 percent third quarter US GDP growth estimate that followed shortly.
The headline number masked a slowdown in consumer spending growth that could herald a weak fourth quarter. Wall Street stocks sank and US bond yields fell amid mixed views of what the growth data heralded for the Federal Reserve's stimulus program.
"With the Fed's easy money days seen increasingly numbered, the ECB's more dovish and divergent outlook augurs meaningful euro depreciation over the coming weeks," said Joe Manimbo at Western Union.
The yen gained amid the mixed data signals, with the dollar falling to 98.02 yen from 98.69, and the euro to 131.50 yen from 133.40.
The British pound was barely changed on the dollar after the Bank of England kept its policy unchanged Thursday: the pound traded at $1.6075, down from $1.6080.
The dollar rose to 0.9159 Swiss franc from 0.9119 franc.
