Euro Pushes Above $1.36 After ECB Meeting, Italian Confidence Vote
The European Central Bank struck a watchful yet patient tone on Wednesday and pushed the euro above $1.35. The common currency traded at $1.3605 at 5:10 GMT on Thursday morning.
The ECB meeting went as expected on Wednesday; the bank kept interest rates fixed and refrained from making any major policy changes. Following the meeting, Reuters reported that ECB President Mario Draghi said the bank was “about to launch a major easing offensive.”
Draghi also underscored the bank's willingness to use any of its financial tools to moderate market interest rates. Most believe that the decline in money market interest rates has allowed the bank to wait on rolling out any new measures.
Adding to the euro's support was a confidence vote in Italy where Silvio Berlusconi was attempting to topple the fragile coalition government. Prime Minister Enrico Letta called for a confidence vote on Wednesday after Berlusconi asked his People of Freedom ministers to resign. The vote came back in favor of Letta, which means the coalition will live to see another day.
The US entered its third day with the government shut down on Wednesday, which has begun to weigh on the dollar. Meetings between Democrats and Republicans on Tuesday showed little forward progress and the two sides remained at a stalemate. The Republican-led House has been fighting for amendments to the Affordable Care Act, but the Democratic Senate and the President himself have made it clear that they will refuse any changes to the law.
Without an agreement on the healthcare program, the emergency spending bill that will reopen the government and send nearly one million people back to work is stuck in limbo.
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