Euro's Strength Key Theme for ECB Chief

FRANKFURT, Germany (AP) -- Markets are waiting to see whether European Central Bank President Mario Draghi will try to talk the euro down as he discusses the future of stimulus for the 19-country eurozone economy.

Draghi is slated to hold a news conference after Thursday's meeting of the bank's 25-member governing council.

The rise in the currency's exchange rate is complicating life for the central bank. The exchange rate has risen 14 percent this year to $1.20, and that could hurt exports and lower inflation, which the ECB is trying to raise.

So far, Draghi has not expressed public concern and analysts are speculating he may now use the news conference to address the issue.

The euro is up on expectations that the ECB will begin scaling back its bond-purchase stimulus beginning in January. Monetary stimulus can drive down interest returns, reducing demand for a currency since investments denominated in that currency earn less.

Market participants can be fairly certain that Draghi will eventually have to phase out the 60 billion euros ($72 billion) per month in bond purchases. That is because the bank will run out of eligible government bonds to purchase after running the program since March 2015.

Draghi has been reluctant to spell out the timing and pace of the withdrawal for fear of sending the euro and market interest rates higher ahead of the fact. That kind of market reaction would blunt the impact of the stimulus before it has run its full course.

A verbal commitment to a slower pace of stimulus withdrawal, or simply an expression of concern about the euro's rise, could help cap the currency's appreciation, market analysts say.

(KA)