ECB comments put pressure on the euro

Published: 25 Sep at 9 AM Tags: Euro, Dollar,

The euro has come under pressure following the release of disappointing German sentiment data. The single currency has also suffered from comments made by Mario Draghi, head of the European Central Bank, earlier in the week that the bank is likely to continue to deliver long-term loans as a way of keeping market rates down.

The US dollar is also being pinned down because of uncertainty about when the Federal Reserve will begin to taper its $85 billion per month bond buying strategy. Last week the central bank announced that stimulus measures were to remain intact.

The euro has dropped 0.4 per cent this week and is presently trading at $1.3473. Although business morale in Germany improved slightly this month, the index has not risen as high as analysts expected suggesting that recovery in the eurozone is still fragile.

The yen is holding firm against its US counterpart as weaker-than-expected data coming from the US caused bond yields to fall. There is also some concern over the political wrangling in Washington. Many analysts expect the risk of a government shutdown to draw attention away from worries about what the Fed is up to.

A tapering of the bank’s easy money policy could come in October according to some Fed officials, but as the next policy meeting is slated for the end of October, a decision is still some way off.