European Central Bank sends a dovish message after rattling markets with 'taper' talk

The euro saw a sharp surge as Mario Draghi spoke on Thursday afternoon, with the president of the European Central Bank (ECB) discussing inflation expectations and the potential end of its asset-purchase program.

Eastern Time. With every economist surveyed by Bloomberg expecting no rate changes, attention will turn to the press conference 45 minutes later, with investors looking for any hints in President Mario Draghi's comments on future stimulus reduction.

Ultra-low interest rates and a huge programme of bond-purchasing, or quantitative easing - effectively pumping money into the economy - were put in place when the economy was in a much more fragile state.

Analysts, however, said the central bank would likely delay significant details on its plans to taper its asset-purchase program until September.

The bond-buying programme, together with ultra-low interest rates, was created to fend off the threat of deflation hitting the eurozone. The inflation rate in the eurozone was 1.3% in June, although it remains below the ECB's target of close to, but below, 2%.

The instigator of the selling, the euro, was 0.98% higher against the greenback to 1.1627, while sterling sold off by 1.37% to 1.1157. The materialisation of improved growth forecast and moderated inflation outlook may however keep prices in a gridlock.

But Draghi said only that the matter would come up "in the autumn".

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The U.S. dollar rose against the euro on Wednesday a day after touching a more than one-year low, but it hit a more than three-week low against the yen as traders awaited meetings of the European Central Bank and the Bank of Japan, APA reports quoting Reuters. Above all the European Central Bank doesn't want to have tighter financial conditions right now.

On the FTSE 100, EasyJet (EZJ) fell to the bottom of the index, down 6% at £13.33, despite the budget airline flagging profits would be higher than expected, at up to £420 million, but still below last year's £495 million.

The bank also retained its asset purchases of Euro 60 billion a month till December 2017, or beyond, if necessary. The decisions were announced Thursday after a regular meeting of the bank's policy council. He said that eventually those factors would fade, but added, "Are we there yet?"

OIL: Benchmark U.S. crude was up 24 cents at $47.36 per barrel in electronic trading on the New York Mercantile Exchange while Brent crude, the standard for global oil prices, rose 33 cents to $50.03 per barrel in London.

United Kingdom retail sales rose by 0.6 per cent in June, beating economist forecasts, following a fall of 1.2 per cent in May.

"The dollar has fallen quite quickly in a relatively short span of time and any signs of stabilization in economic data might trigger a burst of short covering so it is a good time to take some profits", said Viraj Patel, an FX strategist at ING Bank in London.

Philadelphia-area manufacturing activity grew at a notably slower rate in the month of July, according to a report released by the Federal Reserve Bank of Philadelphia on Thursday.

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