The ECB held policy steady and the euro initially rallied on the view that the central bank would not take additional stimulus measures anytime soon. But it skidded after ECB President Mario Draghi vowed to use all the tools at his disposal for "as long as needed."
The euro was treading water against the dollar at $1.1291 after dropping as low as $1.1270 overnight from a more than one-week peak of $1.1399.
"This reversal caught many investors by surprise because the main takeaway from today's meeting is the ECB has no immediate plans to add stimulus nor did they feel that the currency was high enough to renew concerns about its impact on the economy," Kathy Lien, managing director at BK Asset Management in New York, said in a note to clients.
"The ECB is still dovish, they see euro area outlook risks tilted to the downside and expect rates to remain at present or lower levels for an extended period of time," she said.
Ahead of the BOJ, the Federal Reserve will holds its own policy review on April 26-27. While the Fed is not expected to take any measures, it might use its policy statement to prepare markets for an interest rate hike as early as June.
Jobless claims unexpectedly decreased to the lowest level since 1973 as the U.S. labor market remains a pillar of support in the world’s largest economy. New applications for unemployment benefits fell by 6,000 to 247,000 in the week ended April 16, data from the Labor Department showed Thursday.
The Fed Reserve Bank of Philadelphia reported that its general business conditions index fell to negative -1.6 in April (mkt est +9.0)
Oil prices rose in Asian trade on Friday, setting crude futures on course for one of their biggest weekly gains this year, as sentiment has become more upbeat despite ongoing oversupply.
International benchmark Brent crude futures were trading at $45.09 per barrel at 0054 GMT, up more than half a dollar from their last settlement.
U.S. West Texas Intermediate (WTI) crude was up 52 cents at $43.70 a barrel.
With Brent up 8 percent since Monday and WTI 12 percent higher since April 18, this week is set for some of the steepest price rallies so far this year, and crude is up by more than two-thirds since its 2016 lows between January and February.
Reference: Reuters, Bloomberg
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