Hawks on the European Central Bank committee won a battle on Thursday, and the euro is screaming higher.
The ECB, which began its bond purchasing program in March 2015, will extend its bond buying program to March 2017 (and possibly beyond) from September 2016. The central bank will also include the debt of regional and local governments, or muni debt, in purchases.
Though the ECB will reinvest the principal payments of the securities purchased, it is not increasing the amount of monthly purchases beyond the money that is being reinvested.
And that was the problem. The markets, expecting ECB President Mario Draghi to continue his "whatever it takes" stand, believed the ECB would expand the amount of monthly purchases. Accordingly, much of the trading community was long the dollar, short the euro.