Draghi Says the ECB Will Continue to be Accommodative
The euro dipped below $1.30 for the first time in nearly a month in the early hours of Thursday after comments from the European Central Bank underscored some of the risks to the region's growth.
Bank President Mario Draghi remarked that the ECB would continue with accommodative monetary policy as the region's future growth is expected to be fragile.
The ECB's decision to keep providing assistance to the eurozone economy was a stark contrast to a recent decision from the US Federal Reserve, which will be tapering its stimulus spending towards the end of the year. Businessweek reported that Draghi gave a speech in Paris at the French National Assembly in which he underscored that the bank is keeping an open mind about tools which could be used to help prop up the economy. Draghi also said the ECB's soft monetary policies will continue for the foreseeable future.
The euro has been declining against the dollar since Federal Reserve Chairman Ben Bernanke announced that the Fed was planning to roll back its $85 billion per month stimulus plan. However, most analysts say that this drop in the common currency's value was due more to the euro's weakness than the dollar's strength.
The dollar faced pressure as well after Federal Reserve Bank of Richmond President Jeffrey Lacker remarked that he didn't expect the central bank to taper its stimulus program for a few more years. Despite those comments, the dollar managed to remain higher as the euro slipped.
Moving forward, investors will have their eyes on Jobs and manufacturing data which is due out next week. The figures are a good gauge of the economy's progress, and most are hoping to get a clearer picture of the Fed's plans to roll back the bond buying plan with the new economic data.
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