FX Signals – ECB Inflation Risks Mount

Consumer prices in the 19-nation euro area fell more than economists forecast in September, keeping up pressure on the European Central Bank as it debates whether to add stimulus to support the recovery from the coronavirus recession.

The inflation rate came in at -0.3%, slightly below the median estimate in a Bloomberg survey. Core inflation fell to a record-low 0.2%.

Dollar wobbles as investors grow

ECB President Christine Lagarde has flagged that prices in the region will decline in coming months, but said they should turn up again in early 2021.

Euro holds gains as traders brace for ECB meeting

The ECB sees inflation averaging just 1.3% in 2022, far below its goal of just under 2%. It’s currently looking into adjusting this target as part of its strategic review.

Pound Euro (GBP/EUR) Exchange Rate

Some policy makers have started to prepare the ground for providing more support.

Dollar Down With Investors Looking to Thursday’s ECB Meeting

ECB Vice President Luis de Guindos this week downplayed the prospect for imminent action however, saying there’s no need to take a decision immediately. If necessary, the central bank’s 1.35 trillion-euro ($1.58 trillion) emergency bond-purchase program could be recalibrated in the future, he said.

Dollar Weakens Ahead of Sterling

Economists predict the program will be increased by 350 billion euros this year — most likely in December when new economic projections are announced.

Other recent data have been mixed.

FX Signals – ECB Inflation Risks Mount

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