Euro Jumps To 3-month High After Draghi Speech

By Markets MarketWatch Pulse

The euro on Thursday jumped to the highest level since October after European Central Bank President Mario Draghi discussed the pros and cons of using monetary policy to fight off low inflation. In a speech delivered at a conference at Germany's Bundesbank, the ECB boss said the central bank will not "surrender" to low inflation. "Adopting a wait-and-see attitude and extending the policy horizon brings with it risks: namely a lasting de-anchoring of expectations leading to persistently weaker inflation," he said. "And if that were to happen, we would need a much more accommodative monetary policy to reverse it. Seen from that perspective, the risks of acting too late outweigh the risks of acting too early," he added. The speech was mainly interpreted as dovish. However, the euro rose after the comments to trade at $1.1168, the highest level since October, according to FactSet data. Ahead of the comments the shared currency traded around $1.1069, compared with $1.1104 late Wednesday in New York. The dollar on Wednesday logged its largest one-day drop versus the euro in two months, after a disappointing reading on U.S. service-sector activity was seen as putting Federal Reserve interest-rate increases on hold.

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