NEW YORK: The euro crept higher against the dollar on Wednesday after Germany's finance minister downplayed prospects that the European Central Bank will unveil new measures to stave off deflation next week.
The euro had fallen in the previous three trading sessions against the greenback, hitting nearly a one-year low, in part due to hints the ECB could unveil new easing steps at the September 4 monetary policy meeting.
Markets have misinterpreted recent remarks by ECB chief Mario Draghi as hinting at new measures to stave off deflation, German Finance Minister Wolfgang Schaeuble said on Wednesday.
"I know Mario Draghi very well," Schaeuble told the regional daily Passauer Neue Presse. "I think he's being over-interpreted."
At a central bank symposium in Jackson Hole, Wyoming, last week, Draghi had said that the ECB was becoming concerned about falling inflation expectations and "will use all available instruments needed to ensure price stability over the medium term."
Financial markets interpreted the comments as a hint at a possible quantitative easing program, large-scale asset purchases that have been used by the other central banks such as the US Federal Reserve to inject funds into the economy.
According to media reports Wednesday, the ECB has hired BlackRock, the giant US asset manager, to advise it on a program for purchasing asset-backed securities.
The cost of borrowing for eurozone countries fell to record low levels on prospects of a massive ECB cash injection.
The yield on traded German 10-year bonds, the benchmark for the eurozone, fell to a record low 0.915 percent from 0.939 percent late on Tuesday.
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