The euro drifted lower against the other major currencies in European deals on Wednesday, as Eurozone consumer price inflation missed forecasts in November, heightening speculation that the European Central Bank would ease policy again at its two-day meeting ending tomorrow.
Flash data from Eurostat showed that inflation rose 0.1 percent, the same rate as seen in October. Economists had forecast inflation to rise to 0.3 percent.
Headline inflation remains well below the European Central Bank’s target of ‘below, but close to 2 percent.’
Excluding energy, food, alcohol and tobacco, core inflation eased to 0.9 percent from 1.1 percent a month ago. It was forecast to remain at 1.1 percent.
Separate data showed that Eurozone producer prices continued its downward trend in October largely due to falling energy prices.
Producer prices decreased at a pace of 3.1 percent in October from last year, but slower than the 3.2 percent decline posted in September. Prices were expected to fall again by 3.2 percent.
Investors are betting for more stimulus from the ECB, which includes a cut in interest rates on euro deposits and boosting its quantitative easing programme to push inflation up.
Economists expect the ECB to slash deposit rate to – 0.30 percent, from – 0.20 percent at present.
German bond yields also fell, with the yield on benchmark 10-year note lower by 0.46 percent, while that of 20-year note dropped 1.19 percent.
In the previous session, the currency held steady against the pound, yen and the franc, but was slightly weak versus the dollar.
In European trades, the euro lost 0.51 percent to 1.0582 against the greenback, from a high of 1.0636 hit at 5:00 pm ET. Continuation of the euro’s downtrend may lead it to a support around the 1.04 zone.
The euro eased to 0.7030 against the pound and 130.30 against the yen, from its early weekly high of 0.7068 and a 9-day high of 130.93, respectively. The euro is seen finding support around 0.68 against the pound and 127.00 against the yen.
The single currency declined to 1.0862 against the franc and 1.4152 against the loonie, after having advanced to 1.0916 and 1.4214, respectively in early deals. The next possible support for the euro may possibly be seen around 1.07 against the franc and 1.40 versus the loonie.
The 19-nation currency hit a 5-month low of 1.4436 against the aussie and near a 6-month low of 1.5877 against the kiwi, reversing from its prior highs of 1.4535 and 1.5963, respectively. The euro is poised to challenge support around 1.42 against the aussie and 1.55 against the kiwi.
Looking ahead, U.S. ADP private sector jobs data for November and U.S. crude oil inventories data are slated for release in the New York session.
At 8:10 am ET, Federal Reserve Bank of Atlanta President Dennis Lockhart is expected to speak about the U.S. economy at the Broward Workshop, in Fort Lauderdale.
Twenty minutes later, Federal Reserve Chair Janet Yellen will deliver brief remarks at the National College Fed Challenge Finals, in Washington DC. Subsequently, Yellen will also speak about the U.S. economic outlook at the Economic Club of Washington DC at 12:25 pm ET.
At 9:00 am ET, Federal Reserve Board Governor Daniel Tarullo participates in the Economic Growth and Regulatory Paperwork Reduction Act Outreach Meeting hosted by the Federal Deposit Insurance Corp, in Arlington.
The Bank of Canada’s interest rate decision is due to be released at 10:00 am ET. The economists expect the bank to hold rates at 0.50 percent.
At 2:00 pm ET, Federal Reserve issues the Beige Book of economic condition report, in Washington D.C.
At 3:40 pm ET, Federal Reserve Bank of San Francisco President John Williams will speak about the economic outlook before a meeting of Portland community leaders, in Portland.
The material has been provided by InstaForex Company – www.instaforex.com