Market News: ECB Official’s Comments Drops Euro

Adrian Jones

Adrian Jones

Recent comments from European Central Bank (ECB) officials have reignited speculation around more monetary easing to ward off potential deflation.

Influential ECB governing council member and Bundesbank chief Jens Weidmann had on Tuesday saId that the ECB could exercise several options to temper Euro strength and in order to combat deflation.

He said that negative interest rates were an option and that quantitative easing was not out of the question.

This surprised the market as the German central bank has been a consistent critic of quantitative easing.

ECB President Mario Draghi also said on Tuesday that the bank was ready to act if inflation dropped lower than what the ECB expected.

Euro zone consumer price data, due out on Monday, has now been thrust into the spotlight as economists are expecting subdued inflation of 0.7% which would be below the ECB’s annual inflation forecast 1% for 2014. That being said I think that traders will be cautious in being bullish on the Euro over the next few days.

Earlier the Euro held steady, having hit recent lows to the Dollar, trading close to $1.3784.

The Euro hit a 2 week low against buy lexapro cheap sterling, trading at 0.8311 Pound, while it touched a 140.40 Yen, dropping 0.2% on the day.

Against the Dollar the Yen traded at a 1 week high of 101.71 Yen.

The Yen had found some support over renewed concerns about Ukraine following U.S. President Barack Obama having made a tough speech on Russia and after some U.S. durable goods orders data had come in softer than expected.

The Aussie remained firm having edged up by 0.1% to $0.9237, close to a 4 month high.

The Aussie had been supported on hopes of economic stimulus in China and following upbeat comments on the economy yesterday by Reserve bank of Australia (RBA) Governor Glenn Stevens.

Click on Image to Enlarge

[Image: Reserve bank of Australia Governor Glenn Stevens]

Stevens said that he expects the Aussie to weaken, however went on to say that he noticed signs that low interest rates were working to stimulate demand and that a further period of steady policy was likely.

All the best!

Adrian Jones

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