Euro Steady Above $1.36 Despite Draghi's Warning
The euro remained above $1.36 on Tuesday following warnings from European Central Bank President Mario Draghi that the strength of the region’s currency could hinder its recovery.
Despite that, the common currency held on to most of its gains and traded at $1.3616 at 5:30 GMT.
Reuters reported that Draghi confirmed that he has no plans to leave the bank, and he continued to maintain that the exchange rate was not one of the bank’s policy goals.
However, he did admit that the euro’s growing value has presented some challenges for the region and could be part of the reason for the bloc’s dangerously low inflation rate. Although the bank has been under pressure from eurozone policymakers to devalue the euro, Draghi confirmed that at least for now, the bank is not planning to do so.
Economic data from the bloc over the past few months has shown that its recovery may not be the turning point most were expecting. The most recent industrial production figures showed that output fell 1.1 percent in May, less than forecast, but still disappointing. The data has been added to a growing list of reports that suggest the region’s recovery is both fragile and uneven.
Even more concerning was data from individual eurozone members, which showed that industrial production in Germany, the bloc’s largest economy, fell 1.4 percent. France and Italy, the region’s second and third largest economies, also posted a decline in output.
However, some say the industrial production figures could have been skewed by this year’s holiday calendar. Moving forward investors will be focused on PMI data for a better picture of the region’s overall health.
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