Euro Steady As Investors Anticipate ECB Intervention
The euro was steady above $1.37 as markets calmed following encouraging remarks from Russian President Vladimir Putin on Tuesday. The common currency traded at $1.3729 at 5:30 GMT as the chances of violence in Ukraine lessened.
Investors let out a collective sigh of relief after Putin delivered his first news conference since declaring his right to use military force in Ukraine. Reuters reported that Putin defended his original declaration, saying he had the obligation to protect Russians living in Ukraine; but that he was not planning to use force to do so unless absolutely necessary.
Although the conference helped equity markets and decreased the demand for safe investments, investors are still keeping a cautious eye on Ukraine for further developments. Most are hesitant to take large positions as there is still a lot of uncertainty.
With the European Central Bank set to meet on Thursday, investors turned to eurozone data for clues about the bank's upcoming policy decision. Many see the bank cutting its already record low key interest rate in order to combat the bloc's falling inflation. However, recent figures showed that eurozone inflation had stabilized at 0.8 percent, which took some of the pressure off of the central bank. Still, although the figure didn't decline in February, 0.8 percent is still well below the bank's 2 percent inflation target.
Producer price data released on Tuesday weighed on the ECB as it showed that the price of goods leaving the eurozone fell 0.3 percent from December and was 1.4 percent lower than January's figures. The decline adds to evidence that the bloc's inflation rate will likely continue at or around 0.8 percent in the coming months.
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