Euro falls sharply as ECB cuts interest rates

ECB president, Mario Draghi, surprised markets with an unexpected interest rate cut taking the benchmark rate down 10 basis points to just 0.05%. The overnight deposit rate, the rate which depositors get for parking money at the ECB, was cut to a negative rate of 0.2%.  The Euro, which had already fallen from 1.36 to 1.31 over the summer, fell another 1.6% on the news.  European equities rose to levels not seen since January on the expectation that this effort to stimulate the economy can only be a good thing.  The policy move was also accompanied by the unveiling of plans to buy covered bonds and asset-backed securities.  This falls short of the full blown quantitative easing that many had hoped for, perhaps reflecting continued German political resistance to the idea.