Euro strengthens broadly after Draghi comments

Investing.com - The euro pushed higher against the U.S. dollar and the yen on Thursday, after European Central Bank President Mario Draghi said the bank will do whatever is necessary to preserve the euro.

During European late morning trade, the euro edged higher against the U.S. dollar, with EUR/USD climbing 0.44% to 1.2209.

Speaking in London, Draghi also appeared to indicate that the ECB would be prepared to intervene to lower Spanish and Italian bond yields, saying that government borrowing costs would fall within the central bank’s mandate if they interfered with the 'transmission' of monetary policy.

The yield on Spanish 10-year bonds eased back to 7.24% from a session high of 7.38% following the remarks, while the yield on Italian 10-year bonds pulled back to 6.28%.

Meanwhile, sentiment on the greenback was hit by mounting speculation over the possibility of more monetary easing from the Federal Reserve in order to shore up growth and spur employment, ahead of its policy meeting next week.

The euro also gained ground against the yen, with EUR/JPY up 0.46% to 95.48.

The single currency erased losses against the pound, with EUR/GBP inching up 0.01% to 0.7844 and remained steady against the Swiss franc, with EUR/CHF dipping 0.01% to 1.2009.

The pound remained under pressure after data on Wednesday showed that the U.K. economy contracted by the most since the first quarter of 2009 in the three months to June.

The weak data boosted expectations for a further round of quantitative easing by the Bank of England and fuelled fears that the U.K.’s triple A sovereign rating could be downgraded.

The shared currency was mixed against the Australian, Canadian and New Zealand dollars, with EUR/AUD down 0.18% to 1.1770, EUR/CAD edging up 0.01% to trade at 1.2346 and EUR/NZD down 0.39% to hit 1.5346.

The Reserve Bank of New Zealand kept its benchmark interest rate unchanged at 2.5% earlier Thursday and said there was still a “limited” risk that conditions in the euro zone could deteriorate significantly.

Later in the day, European Commission President José Manuel Barroso was to hold talks with talks with Greek Prime Minister Antonis Samaras, amid concerns that the country’s economic reform program is off schedule.

In addition, the U.S. was to release official data on durable goods orders and initial jobless claims, as well as industry data on pending home sales.