Investors Wary Ahead Of ECB Stress Test Results
The euro traded steadily at $1.2645 at 7:00 GMT on Thursday morning after falling below $1.27 on Wednesday as investors worried about the results of the European Central Bank's banking stress tests. The common currency was moving in the opposite direction of the dollar following U.S. CPI results that beat expectations.
Reuters reported that a Spanish news agency said that 11 of the bloc's banks have failed the ECB's stress tests, the results of which are set to be released on Sunday. The tests measured how prepared the region's banks would be to weather extreme financial and economic conditions using the same parameters for all 130 banks tested. The aim is to provide transparency in the eurozone's banking sector and help restore investor confidence to the region. Banks that fail will have nine months from October 26 to improve their balance sheets and obtain a passing score.
Related Link: Brent Lower On Rising Inventories
Following the Spanish report, the ECB replied by saying that final results hadn't even been revealed to the lenders themselves and that any inferences made about the test before the scores are released are "highly speculative."
The euro was also under pressure from reports that the ECB is considering expanding its bond buying plan to include corporate as well as covered bonds. Though the bank has admitted that this is a possibility, it has no plans to do so until the effects of the current stimulus plan can be measured.
The euro was also pushed lower by promising economic data from the United States, which showed that the nation's CPI had risen 0.1 percent in September. The figure came in above expectations and boosted the dollar as worries about falling inflation and a stalling recovery dissipated.
© 2016 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.