The stronger eurozone currency, which has surged to surging to two-and-a-half year highs against the US dollar, has put pressure on Germany’s exports, which is a serious problem for continental bloc. Furthermore, the stronger euro threatens to lower inflation, which is already well below target. But markets were shocked by the ECB warning of the “risk of the euro overshooting” in the minutes taken from the bank’s most recent meeting.
All eyes are now on Mr Draghi who is talking at the Jackson Hole symposium on Friday afternoon, with markets hoping for hints about the ECB’s next move.
Craig Erlam, senior market analyst at Oanda, said: “ECB President Mario Draghi is expected to keep his cards very close to his chest when he speaks at the event. “Draghi will be keen to avoid any further mishaps, having unintentionally misled traders last month which was later corrected by other ECB officials. “With the euro already trading at high levels – noted by the ECB in the recent minutes – Draghi may deliver as dovish a message as is possible while leaving the door open to tapering in the coming months.”
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