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Euro rallies as ECB targets October decision on QE

Euro rallies as ECB targets October decision on QE

by Daniel Grote Sep 07, 2017 at 15:41

The euro has rallied after European Central Bank (ECB) president Mario Draghi signalled a decision on 'tapering' of its bond-buying quantitative easing (QE) programme was likely to be made in October.

The euro jumped 0.8% against the dollar to $1.201, having reached as high as $1.205 in the immediate aftermath of Draghi's comments. Against the pound it rose 0.4%, to 91.7p, having earlier reached 92p.

The euro's rally came as Draghi said the bank had begun 'very preliminary' talks on changes to the quantitative easing programme, expected to result in fewer bonds being bought each month.

'We will announce when we are ready,' he said. 'We think we are going to be ready for much of what we have to decide in October... if not then we postpone.'

The euro has been the strongest performing major currency this year, soaring 14% against the dollar and nearly 8% against the pound in 2017.

That rally has reportedly worried policymakers at the bank about the pace of tapering, or withdrawing QE, amid fears too hasty or strong a move could push the euro higher still, hurting the eurozone's exporters.

Draghi acknowledged the currency's strength in his comments to journalists, saying the rally 'represents a source of uncertainty which requires monitoring with regard to its implications for the medium term outlook for price stability'.

But the prospect of the looming withdrawal of quantitative easing in the eurozone did not deter stock markets.

The FTSE 100 rose 46 points, or 0.6%, to 7,400, while the German DAX 30 rose 0.7% and the French CAC 40 inched 0.3% higher.

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Comments  (2)

  • Novgorod: 

    Nobody wants a strong currency these days! Especially the Eurozone.

    Basically, the ECB is constrained by the state of Eurzone's weakest economy, namely Italy. Can it stand the end of QE without seeing its bond yields soaring? This makes getting out of QE very challenging for the ECB.

    17:10 on 07 September 2017

  • Alan Tonks: 

    October but which year!! I wonder if there is any kinship between Draghi and Carney because they are both poor liars!!

    17:53 on 07 September 2017

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