All Eyes On ECB For Details Of Asset Purchase Program
Investors were cautious on Thursday morning ahead of the European Central Bank’s policy meeting, set for later in the day.
The common currency traded at $1.2636 at 4:00 GMT as the ECB’s divergence from the Fed’s monetary policy weighed.
The euro has been on the decline recently, as the region’s economic data has indicated that the eurozone economy is lagging.
PMI data out this week showed that bloc’s the manufacturing sector is struggling, something that will likely put further pressure on the region’s central bank at today’s policy meeting.
The Wall Street Journal reported that German manufacturing PMI fell to its lowest point in 15 months, a major concern for the region as a whole. Germany has acted as a steam engine for the eurozone in recent months, pulling several nations’ worrisome figures into reputable territory.
However, this month, German manufacturing PMI fell to 49.9 in September from 51.4 in August. The reading fell below the 50-point mark that separates expansion from contraction, a worrisome sign for investors.
Moving forward, all eyes will be on the European Central Bank as its board members make a decision about whether to introduce new stimulus measures in order to spur on eurozone growth.
The bank has already implemented record low interest rates and cheap bank loans designed to boost lending throughout the bloc, but so far the ECB’s efforts have made only a modest impact on the region’s financial data.
This month, some are speculating that the ECB will unveil an asset buying program much like that seen in the U.S.; but some nations, namely Germany, will likely be opposed to such tactics as they believe the eurozone needs structural reform before any type of quantitative easing can be effective.
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