Euro slides as ECB's Draghi sends dovish rate signals

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The euro tumbled on Thursday after European Central Bank President Mario Draghi said the bank discussed a further interest rate cut and raised the possibility of further easing measures to counter weak inflation in the euro zone.

Europe's shared currency fell to a one-month low against sterling, a more than two-week trough versus the dollar, and a three-week low against the yen as Draghi gave a downbeat assessment of the region's economy.

The ECB held rates steady as expected at a meeting in Malta.

The ECB cut rates to rock-bottom levels over a year ago and has repeatedly said they have hit "the lower bound".

In a news conference, Draghi said it would review in December what more it could do to tackle the threat of weak inflation, adding that a further cut to the deposit rate was brought up and the ECB council was ready act.

In addition, the ECB chief also cited the euro's recent strength as a downside risk to the economy.

ECB must tackle inflation issue: Malta FinMin

"Draghi delivered all kinds of dovish signals which weighed on the euro," said Vassili Serebriakov, currency strategist at BNP Paribas in New York. "He was as dovish as can be without changing policy."

In afternoon New York trading, the euro was down 1.8 percent versus sterling at .7216 pence. Earlier it fell to a one-month low of 72.42.

The euro zone single currency was last at $1.1112 against the dollar, down 2 percent on the day.

Against the yen, the slid to its lowest since early this month. It last traded at 134.15, down 1.4 percent.

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The euro is up more than 8 percent against the dollar since the ECB began its bond-buying program in March, complicating the central bank's fight to boost inflation, which is anchored near zero, and economic growth.

Reuters polling puts the median probability of the ECB extending its trillion-euro program beyond its current end date of September 2016 at 70 percent. The same poll saw a 40 percent chance that the ECB would increase its monthly purchases over the next six months.

In the United States, data on initial weekly jobless claims showed levels consistent with a healthy recovery in the labor market. Initial claims for state unemployment benefits increased 3,000 to a seasonally adjusted 259,000 for the week ended Oct. 17.

As a result, the dollar rose 0.6 percent against the yen to 120.66 .