EURUSD Plunges As Draghi Fears Deflation Risks

Doing his best not to get dragged into the currency war conversation, ECB head Mario Draghi is, however, concerned at the impact of a stronger EUR on inflation (or to be more accurate dis-inflation). Noting not only that there remain downside risks to the economic outlook, as we highlighted previously (an 11% rise in trade-weighted EUR since July), his comments (that have smashed the EURUSD down 120pips so far) appear to be addressing a surging EUR.

  • *DRAGHI SAYS EURO AREA GROWTH RISK CONTINUES TO BE ON `DOWNSIDE'
  • *DRAGHI: REAL, NOMINAL EXCHANGE RATE NEAR LONG-TERM AVERAGE
  • *DRAGHI SAYS ECB WILL MONITOR EURO LEVEL FOR INFLATION RISKS
  • *DRAGHI STATEMENT SAYS EURO APPRECIATION RAISES INFLATION RISK (or Deflation)

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