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Forex - Euro gains as Draghi flags fall discussion on tapering

Published 20/07/2017, 14:55
© Reuters.  Euro gains as Draghi flags fall discussion on tapering
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Investing.com - The euro bounced up from the day’s lows against the U.S. dollar on Thursday after European Central Bank President Mario Draghi said discussions on the future of the bank’s asset purchase program would take place in the fall.

EUR/USD was up 0.43% to 1.1564 by 09.56 a.m. ET (01.56 p.m. GMT), nearing Wednesday’s 14-month highs of 1.1582. It fell to a low of 1.1479 earlier.

Speaking at the ECB’s post policy meeting press conference, Draghi said the governing council was “unanimous in setting no precise date on when to discuss changes in the future,” before adding that discussions should take place in the autumn.

Draghi said the risks to the growth outlook in the euro zone are broadly balanced and the region is now enjoying a “robust” recovery.

The global recovery should support trade and boost euro zone exports, he said.

He also noted that growth has not yet translated into "stronger inflation dynamics", pointing out that headline inflation is being dampened by weak energy prices.

Draghi added that a "substantial degree of accommodation" is still needed.

Earlier Thursday the ECB decided to keep the key interest rates unchanged, and said it expects them to remain at their present levels for an extended period of time and well past the horizon of the net asset purchases.

The ECB expects to keep buying €60 billion of new assets each month until December, or beyond, if necessary, until the Governing Council sees a sustained adjustment in the path of inflation consistent with its inflation aims, the bank said in a statement.

The euro extended early gains against the pound, with EUR/GBP advancing 0.83% to 0.8912.

The single currency was also higher against the yen, with EUR/JPY advancing 0.56% to 129.63.

The Bank of Japan kept monetary policy on hold overnight and pushed back the timeline for hitting its inflation target.

The warning on inflation reinforced expectations that the BoJ will lag other central banks in tightening monetary policy.

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