Investors seem largely to have got over a period of jitters spurred by concerns over the pace of U.S. economic growth and signs that several of the world’s major central banks were determined to tighten monetary policy soon.
Thursday’s meeting of the European Central Bank did just enough to show euro zone policymakers were on course to rein in their two-year old emergency programme of bond-buying without quite scaring the horses.
The euro surged to its highest against the dollar since August 2015, but government bond yields for Europe’s southern governments fell sharply – a reflection of relative confidence in the economic outlook and the cautious line taken by ECB chief Mario Draghi.
Euro zone stock markets, however, were lower on the day , with some analysts worrying a stronger euro may do more to undermine growth going forward.
“We can be pretty sure that when Draghi sat down for his press conference yesterday the last thing he expected to see was the euro hit its highest level in over two years and for equity markets to slide back,” said CMC Markets analyst Michael Hewson.
“The strength of the euro does appear to be acting as a bit of a headwind for European stocks as they look to close the week sharply lower, in contrast to the performance of UK and US stocks this week.”
The euro gained around 0.2 percent on the day in morning trade in Europe, hitting an almost two-year high of $1.1676.
