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Euro dips as Draghi scales back inflation forecasts

The euro briefly dipped to a six-day low against the dollar after Mario Draghi scaled back the forecasts for eurozone inflation, despite acknowledging a rosier economic outlook.

The euro dropped 0.5 per cent to $1.1195 as Mr Draghi spoke.

The European Central Bank improved its growth risk assessment to broadly balanced, dropping its downside risk warning and saying the risks were now “broadly balanced”. It also dropped guidance that interest rates might be cut again, but scaled back its inflation forecasts for the next two years.

Mr Draghi emphasised the ECB would continue its quantitative easing programme of bond-buying for the foreseeable future, saying it “will be in the market for a long time”.

That proved supportive for government bond yields, with 10-year German bond yields sliding 1.1 basis points to 0.255 basis points, while the French equivalent dipped 2.8 per cent to 0.661 per cent. Yields fall when prices rise.