The Euro lost ground against peers including the US Dollar as Mario Draghi, President of the European Central Bank, issued his policy statement.
While the central bank opted to keep rates at their present level, Draghi stressed that in order to support the Eurozone’s economic recovery its ‘monetary policy stance will remain accommodative for as long as necessary.’
The Euro to US Dollar Exchange Rate was in the region of 1.2906 as of 15:00 GMT
Draghi continued: ‘The Governing Council expects the key ECB interest rates to remain at present or lower levels for an extended period of time. This expectation is based on the overall subdued outlook for inflation extending into the medium term, given the broad-based weakness in the real economy and subdued monetary dynamics […] The risks surrounding the economic outlook for the Euro area continue to be on the downside. The recent tightening of global money and financial market conditions and related uncertainties may have the potential to negatively affect economic conditions. Other downside risks include the possibility of weaker than expected domestic and global demand and slow or insufficient implementation of structural reforms in Euro area countries.’
The Euro has also been adversely affected in recent days by the political instability in Portugal. When asked to comment on the situation in Portugal Draghi merely stated that the nation’s government has achieved ‘very remarkable results [with its fiscal policy] if not outstanding’. He did add however that the ECB was ‘reassured’ by the appointment of Maria Luis de Albuquerque as Finance Minister following Vitor Gaspar’s resignation.
Draghi wouldn’t comment on Greece’s ongoing negotiations with the Troika, but did defend the ECB’s Outright Monetary Transactions programme (the legality of which is currently being questioned in the German constitutional court).
This is the first time that the ECB has embraced forward guidance, and the central bank’s dovish stance has seen the Euro fall.
However, the common currency was able to hold its ground against a broadly softening Pound as the Bank of England’s own pessimistic policy statement caused the British currency to plummet.
The main causes of Euro movement tomorrow are likely to be German factory order figures and US non-farm payrolls data. Further news from Portugal will also be of interest.
Current Euro (EUR) Exchange Rates
< Lower > Higher – Little Changed
The Euro/US Dollar Exchange Rate is currently in the region of: 1.2906 <
The Euro/Pound Sterling Exchange Rate is currently in the region of: 0.8553 >
The Euro/Australian Dollar Exchange Rate is currently in the region of: 1.4132 <
The Euro/ New Zealand Dollar Exchange Rate is currently in the region of: 1.6668 <
The US Dollar/Euro Exchange Rate is currently in the region of: 0.7704 >
The Pound Sterling /Euro Exchange Rate is currently in the region of: 1.1684 <
The Australian Dollar/Euro Exchange Rate is currently in the region of: 0.7095 >
The New Zealand Dollar/Euro Exchange Rate is currently in the region of: 0.5989 >
(Correct as of 15:00 GMT)
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