The central bank did not increase the amount of government bonds it buys while the six-month extension of the programme was perceived as the bare minimum, given traders looked for an extension of one year or even making it an open-ended plan.
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But Thibault Mercier at BNP Paribas suggested the market had overreacted and that Draghi’s underlying assessment that recovery was underway in the 19 countries that share the euro was correct. Defending the moves, ECB President Mario Draghi said the market just needed to take time to understand them, adding they could always be adapted.
That had sent the dollar on another tear higher but disappointment at the ECB’s measures turned things around completely, triggering in turn a rally in United States government bond markets and a handful of key emerging market currencies.
Still, the dollar resisted falling further as market attention shifted to the release later on Friday of the closely watched U.S.jobs data for November. The Nasdaq was down 86 points or 1.7% at 5,038.
Analysts queued up to stress the influence on the market of the impending European Central Bank decision with the data giving European Central Bank chief Mario Draghi “a little bit more ammunition”, according to James Hughes, chief market analyst with GKFX.
Investors had expected a bigger cut to the deposit rate and an enhancement in the monthly asset purchases of Euro 60 billion to as much as Euro 80 billion.
The ECB moved its deposit interest rate further into negative territory, adjusting it to -0.3% from -0.2% in an attempt to encourage banks to lend to business rather than leave it on deposit with the central bank.
On Thursday, Wall Street’s benchmark S&P 500 stock index had its biggest one-day percentage decline since September 28, dropping 1.4 percent.
The ECB was under fire Friday for failing to act as decisively as expected to rekindle inflation, with some market players suspecting divisions among the bank’s top brass stopping it from doing more.
Now it’s the U.S. Federal Reserve’s turn to decide.
Mr Draghi described the steps as a recalibration of the ECB’s stimulus programme, which he said had been a success since it began in March.
“Our monetary policy can not achieve everything”, he said. The Fed has said it wants to see a strong improvement in wages before it raises interest rates.
Fed Chair Janet Yellen said on Wednesday she was “looking forward” to a U.S. interest rate rise but an unexpectedly weak manufacturing survey this week has also raised fresh doubts about the Fed’s rate path.
Crude oil prices extended Thursday’s 3 per cent rise as OPEC leaders gathered in Vienna.
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It was effectively an assessment from investors that 2 percent inflation in the eurozone, the single needle in the ECB’s compass, as it often used to say, would remain off the map for the foreseeable future.
