The euro rose Thursday after European Central Bank chief Mario Draghi’s comments bolstered the single currency even as interest rates were kept low again.
Draghi avoided details on when the ECB might begin to wind down its bond-buying program, but said the matter would be on the agenda this fall. Analysts also noted that he avoided comments that might have deflated the euro’s recent rally.
Equities were mixed, with Paris finishing lower and Frankfurt flat after both markets lost momentum with the euro’s rally. In the US, the Nasdaq eked out a record for a third straight session, while the Dow and S&P 500 both retreated from all-time highs set Wednesday.
The ECB kept its key interest rates unchanged as Draghi played down expectations the bank could soon announce an end to its mass buying of 60 billion euros ($69 billion) a month of government and corporate bonds.
“We need to be persistent, and patient,” Draghi said, as “really there isn’t any convincing sign of pickup” in inflation.
But Draghi also said tapering would soon be discussed.
“We simply said that our discussions should take place in the fall, or in autumn, since we are in Europe,” Draghi said.
Most ECB watchers expect the central bank to soon announce a path out of bond-buying that will see it “taper” or wind down the scheme step-by-step next year.
While inflation remains sluggish, economic growth in the 19-nation eurozone has picked up strongly enough to dispel the fears of deflation that had prompted policymakers to launch QE.
“Although Draghi said tapering scenarios were not discussed at this meeting and they didn’t talk about what will happen in September, the ECB’s tease about discussing tweaking stimulus sometime between September and November was enough to satisfy euro bulls,” said BK Asset Management managing director Kathy Lien.
The euro was up more than one percent near 2030 GMT at $1.1631.
“On balance, we remain comfortable with our view for now that the ECB will announce a tapering plan at the next meeting on 7 September,” Nomura said in a note.
“No clear message from the ECB and President Draghi on the tapering announcement in September may slow the momentum of euro appreciation, after recording a new high today. However, Mr Draghi´s benign view on the recent euro appreciation should limit room for retracement, in our view.”
New York – DOW: DOWN 0.1 percent at 21,611.78 (close)
New York – S&P 500: DOWN less than 0.1 percent at 2,473.45 (close)
New York – Nasdaq: UP 0.1 percent at 6,390.00 (close)
Euro/dollar: UP at $1.1631 from $1.1513 at 2100 GMT Wednesday
Pound/dollar: DOWN at $1.2972 from $1.3021
Dollar/yen: UP at 111.94 yen from 111.84
Oil – Brent North Sea: DOWN 40 cents at $49.30 per barrel
Oil – West Texas Intermediate: DOWN 33 cents at $46.79 per barrel
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