Markets Cautious Ahead Of ECB Meeting
The euro remained below $1.25 on Thursday with the European Central Bank’s policy meeting set to take place later in the day. The common currency traded at $1.2497 at 7:30 GMT as investors wondered whether or not the bank’s divided governing council would play a role in Thursday's policy decisions.
Reports this week indicated that some of the bank’s members were divided over whether to expand the bank’s balance sheet further, making today’s meeting a crucial indicator of the bank’s future plans. Bank President Mario Draghi is looking to ease aggressively, but some of his colleagues are unhappy about that course of action.
While no policy changes are expected at Thursday’s meeting, most analysts see further easing coming in December. Most see the bank expanding its covered bond purchases to include corporate bonds, something Draghi has said the bank is open to doing if need be.
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Weak data from the eurozone this week has also added to pressure on the ECB to ease. On Wednesday, a retail sales report showed that eurozone consumers were more cautious about spending as the region’s retail sales dropped 1.3 percent in September. The figure suggests that consumer spending in the third quarter is likely to have slowed.
Reuters reported that analysts are expecting to see the euro remain near $1.25 if the meeting holds no surprises. However, the common currency could sink as low as $1.20 if the bank’s forward guidance points to more easing.
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