Euro Below $1.34 Ahead Of ECB Meeting

The euro remained under pressure on Wednesday with the European Central Bank meeting on the horizon and data from the bloc indicating that the region was in need of further easing. The common currency traded at $1.3357 at 6:00 GMT on Wednesday morning, reflecting investors’ caution ahead of the bank’s Thursday policy meeting.

 

Recent data from the eurozone has indicated that the bank will be forced to ease again in the coming months, but most don’t expect that it will to do so at its August meeting. Instead, bank President Mario Draghi will likely ask investors for more patience as the easing measures introduced at June’s meeting take effect.  However, data from the region has shown that inflation is continuing to decline, raising worries that the bloc could fall into a period of deflation.

 

Though last week’s report showed that eurozone inflation was at just 0.04 percent in July, the Wall Street Journal reported that producer prices rose modestly in June, something that suggests inflation won’t sink any lower. On Monday, a Eurostat report showed that producer prices were up 0.1 percent since May, but fell 0.8 percent from June of last year. Though the figures provided some evidence that the eurozone is not headed for a period of deflation, most expect it won’t be enough to take the pressure off of the ECB.

 

Policymakers from struggling nations like France have been calling on the ECB to do more to help stimulate growth and restore the bloc’s competitiveness. With the ECB’s inflation target at two percent, the bank will have a lot of work to do before the region’s inflation figures can be considered stable.

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Posted In: NewsEurozoneCommoditiesForexGlobalFederal ReserveMarketsEuropean Central BankMario Draghi
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