Currency Note Euro

ECB President talk weakens the euro

By Callum Holmes September 4th, 2015

The euro had a mixed week, starting well but ending with a sharp fall against sterling and the US dollar on Thursday after the European Central Bank (ECB) hinted that it could expand its quantitative easing (QE) programme due to Europe’s inflation outlook, which is looking increasingly likely to deflationary levels.

On Thursday afternoon, ECB President Mario Draghi said the current QE program provides sufficient flexibility to adjust the size and duration of the programme. The ECB also held its main interest rate at the 0.05% level, and lowered its growth and inflation forecasts, blaming this on falling oil prices and disappointing growth in China.

Friday could well be a recovery day for the euro, with growth data to be released at 10am. It is expected to fall slightly, from the previous reading of 0.4% to 0.3%. Anything above last quarter’s figure has the potential to provide a boost to the euro until the weekend.