Draghi Proposes Further Eurozone Economic Integration
The euro was steady above $1.36 after gaining against the dollar on Wednesday. The euro's strength followed the release of the Federal Reserve’s June meeting minutes and a talk from European Central Bank president Mario Draghi.
The common currency traded at $1.3639 at 6:45 GMT on Thursday morning as investors weighed the two central banks’ positions.
The Fed’s June meeting minutes did not surprise as most of what the central bankers discussed fell in line with what markets were predicting. The bank is planning to finish tapering off its asset buying scheme by October and is still up in the air about when to raise interest rates.
The minutes showed that the bank remained positive about the region’s recovery, but will be cautiously tightening policy so as not to disrupt the economy’s forward progress. Most expect that the Fed will maintain its current interest rate until several months of solid data prove that the nation is ready to stand on its own.
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Meanwhile the European Central Bank is moving in the opposite direction. At last month's policy meeting the bank released a stimulus package. Though the ECB is not expected to make any further moves until its targeted loans program kicks in sometime in the fall, some speculate that the ECB could have to implement a more aggressive easing strategy by making asset purchases similar to those made in the US.
On Wednesday, The Wall Street Journal reported that ECB President Mario Draghi wants further economic integration among eurozone members. The large discrepancies between members has long been a point of contention for the bank, but while speaking in London, Draghi was, for the first time, detailed a vision for the region’s financial system.
He envisions new rules that would require eurozone members to implement reforms to make their economies more competitive. Such a system, Draghi said, would create new jobs and boost growth evenly across the region.
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