Euro Sinks Following Draghi's Remarks
The euro began the week on a low note after European Central Bank President Mario Draghi surprised investors at the Jackson Hole Summit and opened the door for further easing.
The common currency traded at $1.3190 at 7:45 GMT on Monday morning ahead of inflation data due out on Friday, which is expected to show yet another drop to 0.3 percent in August.
While most investors had already expected the ECB to ease further in the future, recently the bank has been asking investors for patience as its June stimulus kicks in. However, Draghi departed from that sentiment while speaking on Friday and said the ECB would use all of its available tools to fight the region’s falling inflation.
According to Reuters, Draghi’s speech included some key differences from the script that was released on the ECB website. Most notably, was Draghi’s inclusion of inflation expectations, saying that short-, medium- and long-term inflation is seen declining and that the bank would address this at its September 4 meeting.
Meanwhile, the Federal Reserve seemed to be moving in the opposite direction as Fed Chair Janet Yellen reiterated the Fed’s plans to slowly diminish the bank’s assistance until the U.S. economy can stand on its own.
While Yellen didn’t give away any new clues about the bank’s timeline for raising interest rates, her tone was less dovish that most expected which gave dollar bulls a reason to increase their bets.
Moving forward economic data will be closely watched as investors look for clues about either central banks’ future moves.
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