Draghi Signals Euro Strength May Hurt ECB’s Recovery Efforts

European Central Bank President Mario Draghi signaled policy makers are concerned that the euro’s strength will hamper their efforts to pull the economy out of recession.

“The exchange rate is not a policy target, but it is important for growth and price stability,” Draghi said at a press conference in Frankfurt today after the ECB kept its benchmark rate at a record low of 0.75 percent. “We want to see if the appreciation is sustained, and if it alters our assessment of the risks to price stability.” The comments pushed the currency down more than a cent against the dollar.

Bad news for the markets: US economy shrinked in the last quarter of 2012.

U.S. economy fell by 0.1% in the fourth quarter of last year denying even the most pessimistic forecasts of analysts who estimated an average increase of 1.1%.

Evolution is lower compared to the third quarter, the U.S. GDP increased by 3.1%, and shows that hundreds of billions of dollars that the Fed, the U.S. central bank continues to pump into the economy fail expected to bring economic recovery.

The news brought declines in European stocks while U.S. index futures prices indicate that U.S. markets were open in the fall. After a substantial rally in recent weeks the leading American indices closed to historical highs dated from 2007.

More and more analysts warn, however, that increasing U.S. exchanges is not supported by economic growth. Thus, any indication that the Fed will moderate capital inflows could have negative effects on the capital markets.

Fed ends a marathon monetary policy meeting, which lasted two days and is expected to announce the findings. Markets expect tense press conference with the head of the Fed and investors will weigh every word of it to try to guess which direction the stock prices will go in the next period.