A rally in the Euro earlier toady fizzled out after firmer expectations of monetary easing policies took over bullish momentum in the European currency. The market is confident that the European Central Bank will conclude its monetary policy review meeting tomorrow by announcing a slew of stimulus measures.
Euro Loses Steam Ahead of ECB Meet
Easing expectations exerted pressure on the Euro, which tumbled 0.34% to 1.0972 against the U.S. Dollar. Amid other measures, it is likely that the ECB will trim its deposit rate further to negative 0.3% and will announce an injection of €60 billion of funds into the economy through asset purchases. It is to be noted that the Eurozone continues to battle what it sees as deflationary pressures, which made a reappearance last month. Consumer prices fell to 0.2%, below the ECB’s inflation target of a level just under 2%.
EUR/JPY extended its fall during today’s session as the pair traded down by 0.40% to 123.50. Meanwhile, the U.S. Dollar also traded weaker against the Japanese Yen as poor trade data in China dampened expectations of an early economic revival. Yesterday, Chinese officials reported that it witnessed a slump in both its exports and imports, which fell 25.4% and 13,8% respectively.
Dollar retreats against Yen
The weaker than expected numbers from China has led to growing fears that the economy is pushing further into a slowdown. This has caused investors to rush to safe bets such as Yen, Gold and Swiss Franc. The Dollar was trading 0.09% lower against the Yen at 112.52 but managed to maintain its momentum against the Franc at 0.9977, up by 0.19%.
Elsewhere, the British Pound (GBP) continued to trade cautiously against the greenback. After trading in the red for a while, the pound managed to add 0.05% to 1.4221 against the U.S. dollar. However, experts held the view that upside in the pound is limited until clarity on Britain’s exit from the European Union emerges.
The U.S. Dollar Index is trading higher by 0.17% to 97.33 in the premarket.