Market Overview

ECB Expected To Take Dovish Tone

ECB Expected To Take Dovish Tone

The euro made some modest gains following the weekend after jobs data in the U.S. disappointed dollar bears.

The commodity traded at $1.3423 at 8:30 GMT as investors geared up for this week’s European Central Bank meeting.

Most expect the euro to continue its downward spiral, as the European Central Bank will likely strike a dovish tone with its policy statement on Thursday.

The bank recently released a stimulus package designed to help combat the region’s falling inflation and kick-start the sputtering economy. However, data from the region has showed the bank will likely need to do more. Most are expecting the bank to ease further in the months to come but not at this week’s meeting.

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Last week, inflation data from the bloc showed that consumer prices increased by just 0.4 percent annually in July, even lower than June’s 0.5 percent figure. Many worry that the bloc is heading toward a period of deflation and that the bank will need to act on a larger scale in order to reverse the trend.

Despite the troubling inflation figures, most expect that the bank will wait for more data before easing again. The region’s central bankers have said the latest package of easing measures will need time before its effect can be seen in the region’s economic reports.

Reuters reported that most are expecting ECB President Mario Draghi to confirm the bank’s commitment to doing whatever it takes to keep the eurozone economy afloat, including using extraordinary policy measures.

Since the bank is not likely to take action, Draghi’s press conference following the meeting will be closely watched for any indication of the bank’s future plans.


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