Currency Note Euro

Italian politicians pull back from the brink

By Smart Currency October 3rd, 2013

The euro bounced back yesterday and appreciated sharply against sterling and the US dollar following European Central Bank President Mario Draghi’s speech in the early afternoon. Draghi did not refer to a further Long-Term Refinancing Operation (LTRO) as expected and seemed unperturbed by the single currency’s continual strengthening against the US dollar over recent months. Many had expected him to mention further LTROs – which are essentially means of providing liquidity to Eurozone banks – in order to cause the euro to weaken. However, Draghi did not show concern as the euro – US dollar rate approached the key level of 1.36, prompting further euro strength. More positive news for the seventeen-nation currency was seen as Sylvio Berlusconi reneged on his promise to topple the Italian Government as it was revealed that a number of his influential ministers would not walk out. This lead to Italian premier Enrico Letta comfortably winning yesterday’s vote of confidence, bringing more stability to the region and boosting euro performance. After a turbulent day yesterday, movements today are difficult to predict. An array of moderately-influential data is set to be released, but may end up playing second fiddle to the continuing reaction to yesterday’s events and the on-going developments in the States. The figures being released today include: Spanish and Italian services data; monthly Eurozone retail sales figures; and a Spanish and French 10-year bond auction. Call your trader now for an update on euro movements.