Euro Falls Ahead Of Inflation, ECB Meeting
The euro was steady at $1.3632 at 6:20 GMT on Monday morning after posting its largest monthly loss in a year on Friday.
The common currency has been under pressure since the beginning of May when European Central Bank President Mario Draghi said he would be “comfortable” easing in June following the bank’s May policy meeting.
This week, the bank is set to meet on Thursday, stealing the spotlight from the week’s other economic releases. On Wednesday, inflation data will be released which will likely provide some insight about the bank’s plans.
Reuters reported that most are expecting the report to show that inflation was just 0.7 percent in May, well within what Draghi and the ECB have defined as the “danger zone."
Eurozone inflation has been a major concern recently, as the bloc’s figures have been below one percent for eight months.
While many suggested that such low readings combined with a strong euro could send the region into a period of deflation, the ECB has said it doesn’t see that situation arising, but that the bank will remain “particularly watchful”.
Thursday’s meeting could shake up markets if the bank doesn’t produce a rate cut as expected. Most are expecting that the bank will cut its main interest rate, and some think the bank will also include liquidity measures, so some easing has already been priced in.
However, if the bank steps up and makes a more aggressive move than markets expect, the euro could tumble following the meeting.
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