Italian prime minister Enrico Letta has won a vote of confidence in the Italian parliament, foiling Silvio Berlusconi’s plan to force a collapse of Letta’s fragile coalition government.
At the same time, European Central Bank president Mario Draghi is delivering his monthly press conference following the ECB’s monthly policy meeting.
Despite Draghi’s efforts to come across as dovish, the euro is surging against the dollar.
The ECB president said in the opening remarks to his press conference that ECB interest rates will stay low for an extended period of time, and that risks to the euro area growth forecast remain on the downside.
In the Q&A, Draghi said that the ECB Governing Council had discussed a rate cut, something economists predict may happen later this year. Draghi also said in response to a question about the strength in the euro that while the central bank doesn’t target the exchange rate, it acknowledges that exchange rate developments are important for growth and the ECB is attentive to them.
Over the weekend, Berlusconi tried to undermine Letta by announcing the resignation of several ministers of Berlusconi’s own PDL party from Letta’s cabinet. However, Italian markets have gained in recent days as it became clear that many PDL senators would go against Berlusconi and cast a vote of confidence in Letta and his government.
The chart below shows the move in the euro against the U.S. dollar: