Euro Strengthens On Draghi Comments

The euro jumped more than six percent following the European Central Bank meeting on Thursday, where President Mario Draghi assured investors that he and his colleagues saw growth in the second part of 2012.

The common currency traded at $1.3235 at 8:38 GMT on Friday morning, still lifted by Draghi's positive comments.

Following its June policy meeting, the ECB announced that it wouldn't take any new measures this month to help dig the region out of its deepening recession. Draghi indicated that the bank wanted to save its stimulus tools for later use. Instead of the bank intervening, Draghi urged individual eurozone governments to push forward with their fiscal reforms and debt reduction programs.

The Wall Street Journal reported that the bank met expectations and kept the interest rate unchanged at 0.5 percent, already a record low. At the press conference following the meeting, Draghi indicated that the finance ministers discussed several options for increasing small business lending including lower deposit rates and stimulus programs, but decided to keep these measures “on the shelf."

Despite data that shows only tepid recovery signs, the finance ministers came to the consensus that no ECB action was needed at the present moment. Draghi reassured investors that the bank would act if need be, however his decision to maintain the bank's current position shows that he and his peers are confident about a eurozone recovery later in the year.

The bank reduced its 2013 GDP forecast to reflect a 0.6 percent drop and increased next year's forecast to show 1.1 percent growth. Inflation is expected to remain well below the bank's 2 percent target at 1.3 percent in 2014. Many are criticizing the bank's failure to meet its inflation targets by saying they should do more to raise inflation. Draghi countered the critics by saying that low inflation could be a good thing for the economy since people would be more likely to buy more.

BY Laura Brodbeck