MARIO DRAGHI LOOKS FOR MODERATE GROWTH AS EURO FALLS AGAIN
Sept 25 2014, 3.00pm GMT
Divergence between the euro and the greenback is deepening as EUR/USD breaches $1.2750.
ECB President Mario Draghi, in yet another speech this week, was adamant to stick the course of his fiscal policies for the Eurozone but still insists that he has tools available to gain this year’s lost ground. In fact the euro has been on a losing streak for 22 months, while the US dollar has risen against nearly all global currencies and is now on a four year high of 85.342 against the euro, recording its eleventh consecutive weekly gain.
This makes the gap between US and Bund yield the widest in 15 years.
As the FED views the possible tail end of the US quantitative easing programme, Draghi may pull out his own QE. So far, the ECB has launched low interest, four-year loans in an attempt to give the banks confidence to start lending but there has not been the expected take-up needed to stimulate economies. Draghi has been reported to say that unemployment is still too high across the euro zone and government s need to act on the reforms in place.
In the meantime, the sanctions on Russia due to the Ukrainian crisis have not had the expected negative effect on the euro zone and Draghi looks to gain growth and halt deflation soon.
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