Euro Steady Near Nine Month Low As Inflation Falls Further
The euro looks set to begin August near a nine month low reached earlier in the week. The common currency traded at $1.3385 at 6:36 GMT as a stronger dollar and disappointing inflation figures weighed.
On Thursday, Eurostat released troubling inflation data showing that consumer prices had risen just 0.4 percent annually in July. Most had expected the region’s inflation to remain at an already low 0.5 percent, so the figure surprised and added to growing concern that the bloc will slip into a period of deflation.
Eurozone inflation has been in what the ECB has dubbed “the danger zone” (less than one percent) for nearly a year, something the bank tried to rectify by announcing a package of stimulus measures back in June. Nonetheless, the Wall Street Journal reported that the European Central Bank will likely refrain from making any policy changes at next week’s meeting, despite the new inflation data.
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ECB officials have asked for patience as the measures take time to kick in, but most analysts believe that the bank will be forced to act again in the coming months.
Meanwhile, the dollar held steady near a more than 10-month high as investors waited for non-farm payrolls data, due out later in the day. Most are expecting to see a strong report with employers adding around 233,000 new jobs in July. If the data meets expectations it will mark the sixth consecutive month that payrolls expanded by more than 200,000, but will be a decline from last month’s figures.
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