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Euro Strength Could Spell Trouble For Struggling Economies

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Euro Strength Could Spell Trouble For Struggling Economies

The euro pushed above $1.39, riding on a wave of momentum generated by last week's European Central Bank meeting. The common currency traded at $1.3938 at 5:50 GMT on Thursday morning as investors braced for what was likely to be disappointing data from China.

Recently, eurozone economic indicators have been good enough to keep the currency buoyant despite the weight of worries about a slowdown in China. Last week, ECB President Mario Draghi helped the currency improve after he reassured investors that the bloc's economic conditions did not warrant a policy change. Since that press conference, the euro has been trading near a two and a half year high against the dollar.

See also: #PreMarket Primer: Thursday, March 13: Chinese Data Misses The Mark

However, recent comments from several of the bloc's finance ministers show that the bank's decision was far from unanimous. The Wall Street Journal reported that German Finance Minister Wolfgang Schauble said that in his view, the region's interest rates are already too low. Schauble noted that this was a German perspective, where the nation's economy is ticking along at a steady pace. For some other eurozone nations, this may not be the case.

The bloc has long struggled with how to ensure that policy decisions trickle down to the economies that need them most.

Central Bank Governors in both France and Spain have said that the ECB may be forced to make a policy change at April's policy meeting. Both central bankers noted that the euro's current strength makes it difficult for struggling economies to remain competitive while also increasing the chances of dropping inflation.

Posted-In: News Eurozone Commodities Forex Global Federal Reserve Pre-Market Outlook Markets Best of Benzinga

 

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