At the ECB’s policy meeting, Mr Draghi said that the Central Bank would leave interest rates at record low levels for an extended period as the region continues to struggle with low inflation and a stalling economic recovery.
Draghi also reiterated that the bank is still committed to implementing unconventional measures if the Eurozone’s outlook deteriorates further.
Investors chose to focus on Draghi’s comments and widely ignored other negative data releases, which showed that Germany’s trade surplus narrowed from €18.8 billion in May to €16.2 billion in June.
The figure was worse than economist forecasts for a narrowing to €17.5 billion.
The single currency did receive some support from a separate report which showed that industrial production in France increased by 1.3% in June, a figure which exceeded economist expectations for a rise of 1%.
May’s weak figures were revised from -2.3% to -1.6%.
Mr Draghi also commented on Italy’s return to recession.
‘Draghi made a strong call for structural reforms, noting that there is now ample evidence to suggest that countries that have reformed their economies are showing a stronger economic performance than the rest of the euro zone. This sounds like a strong rebuttal of the approach taken by Italy’s new prime minister;’ said the chief European economist at Mizuho Bank Plc.
Sterling meanwhile was weakened by the release of disappointing UK trade data.
According to data released by the Office for National Statistics (ONS), the UK’s overall trade deficit increased from £2.4 billion to £2.5 billion.
Also weighing upon the UK trade figures are increased geopolitical concerns.
‘Exporters are being hit on two fronts. First, an appreciating exchange rate, which has risen 10% over the past year, is making UK-produced goods more expensive abroad. Second, already weak demand in many overseas markets is being hit further by growing uncertainty about the Ukraine crisis, especially in northern Europe. Escalating geopolitical events in Gaza and Iraq add to the sense that global risk aversion is creeping higher, which will inevitably mean slower economic growth,’ said Markit’s Chief economist Chris Williamson.
The situation in Ukraine remains tenses and fears were raised of an escalation in the Iraq conflict after the USA announced that it would be launching air strikes against Islamist fighters in the Middle Eastern country.
Euro Exchange Rate News:
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Euro,,US Dollar,1.3400 ,
Euro,,British Pound,0.7972 ,
Euro,,Australian Dollar,1.4446 ,
Euro,,Canadian Dollar,1.4637 ,