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Euro sinks as ECB’s Draghi reveals cuts to euro zone inflation projections

By dailymail / Published on Sunday, 11 Jun 2017 05:13 AM / No Comments

Timothy Graf, head of macro strategy at State Street Global Markets, told CNBC via email that improved European data would likely support the euro and risky assets over the rest of the year, but said the central bank was in no hurry to rescind its accommodative policy.

“The tone to European data has clearly been positive this year and should support the single currency and European risky assets in to the second half of 2017. Nevertheless, with headline inflation rates rolling over and core inflation still subdued, the central bank does not need to hurry in removing accommodation,” Graf noted.

The ECB has confirmed that it will continue its asset purchase program until the end of December this year – and further still, if necessary.

Though the euro dipped in the immediate wake of the announcement, Graf said that the shared currency would likely hold its strength. However, he added that the inflation levels would need to show further upwards movement before the euro would see a significant uptick.

“Today’s announcements largely met expectations, so recent euro strength will likely hold; however, with euro bullishness having become something of a consensus view in recent weeks, a turn back towards sustained higher inflation is likely required to extend these gains,” said Graf.

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