Euro Drops On Rumors Of ECB Revising Inflation Goal
July 18 2019 - 3:43AM
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The euro weakened against its major counterparts in the European
session on Thursday, following a media report that European Central
Bank's staff are studying the possibility of revising inflation
goal.
Bloomberg reported that the staff of the ECB have begun studying
a possible revamp of their inflation goal, which currently is
below, but close to, 2 percent over the medium term.
Such a move could allow policymakers to pump monetary stimulus
for a longer period.
The ECB's inflation mandate has been kept unchanged since 2003.
The study includes questioning of the current inflation target and
whether or not it is desirable in the present scenario.
European stocks fell in cautious trade as investors fretted
about the outlook for corporate earnings in a slowing growth
environment.
The currency traded mixed against its major opponents in the
Asian session. While it held steady against the franc and the
pound, it rose against the greenback. Against the yen, it
dropped.
The euro slipped to a 3-day low of 0.8979 against the pound,
from a high of 0.9039 hit at 8:45 pm ET. The euro is seen finding
support around the 0.88 region.
Data from the Office for National Statistics showed that UK
retail sales recovered unexpectedly in June.
Retail sales volume increased 1 percent month-on-month in June
largely driven by non-food product sales. Sales were forecast to
fall 0.3 percent after easing 0.6 percent in May.
The euro eased to 1.1205 against the greenback, after rising to
a 2-day high of 1.1244 at 2:00 am ET. Further downtrend may take
the euro to a support around the 1.10 level.
The euro depreciated to a 1-1/2-month low of 120.78 against the
yen from yesterday's closing value of 121.16. The next possible
support for the euro is seen around the 118.00 mark.
Data from the Ministry of Finance showed that Japan posted a
merchandise trade surplus of 589.5 billion yen in June.
That exceeded expectations for a surplus of 403.5 billion yen
following the 968.3 billion yen deficit of May.
The euro fell to a 3-1/2-month low of 1.6626 against the kiwi,
more than 2-month low of 1.5943 against the aussie and a 2-day low
of 1.4631 versus the loonie, from its early highs of 1.6696 and
1.6033, and a 2-day high of 1.4679, respectively. Next key support
for the euro is likely seen around 1.64 against the kiwi, 1.575
against the aussie and 1.44 versus the loonie.
The European currency declined to a 2-day low of 1.1063 against
the franc, following an advance to 1.1089 at 7:00 am ET. If the
euro slides further, it may find support around the 1.09 level.
Data from the Federal Customs Administration showed that
Switzerland's exports decreased marginally in June amid a faster
growth in imports.
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