The euro continues to fall
16.09.2015
On Wednesday afternoon the main currency pair trading on the downside - too many expectations are ahead, although the facts are not very encouraging either.
In the middle of the week the euro/dollar continues to decline. Current bids are around the level of 1.1236. The pair is being sold since the beginning of the week. On the one hand, this is understandable: the shadow of the decisions of the Federal Reserve puts pressure on investors and encourages reducing risks. However, in the thin market it could be good to pump up the pair so that it will be in a better place to sell from in the future.
But not all is so simple. This morning, statistics for the euro area were published, and they are not very positive. The final calculation of inflation for August showed that the indicator increased by only 0.1% y/y against the forecast of growth of 0.2% and they same figure for July. A year earlier, inflation in the euro area in August grew by 0.4% y/y. Not much, but not as bad as it is now.
Yes, of course, the inflation indicator is not as agile as the other macro statistics. However, it is even harder to accelerate it than to slow it down. It is strange that the massive stimulus in the format of QE by the European Central Bank is not providing a stable positive effect here.
The components of inflation released by Eurostat show that the 11 countries of the 31 member states of the EU, show deflation. These include Cyprus, for example. Strong acceleration in inflation was recorded in Belgium and Austria, as well as some northern countries. The problem is that there are twice more facts of decline in inflationary pressures than facts of growth.
It is possible that to activate inflation the ECB with strengthen QE - not now, of course, but later. It is highly likely.
The main risk for the euro/dollar remains the Fed meeting, but first we should pay attention to the statistics on the US CPI. This is important for understanding the future steps of the regulator of the New World.
RoboForex Analytical Department
In the middle of the week the euro/dollar continues to decline. Current bids are around the level of 1.1236. The pair is being sold since the beginning of the week. On the one hand, this is understandable: the shadow of the decisions of the Federal Reserve puts pressure on investors and encourages reducing risks. However, in the thin market it could be good to pump up the pair so that it will be in a better place to sell from in the future.
But not all is so simple. This morning, statistics for the euro area were published, and they are not very positive. The final calculation of inflation for August showed that the indicator increased by only 0.1% y/y against the forecast of growth of 0.2% and they same figure for July. A year earlier, inflation in the euro area in August grew by 0.4% y/y. Not much, but not as bad as it is now.
Yes, of course, the inflation indicator is not as agile as the other macro statistics. However, it is even harder to accelerate it than to slow it down. It is strange that the massive stimulus in the format of QE by the European Central Bank is not providing a stable positive effect here.
The components of inflation released by Eurostat show that the 11 countries of the 31 member states of the EU, show deflation. These include Cyprus, for example. Strong acceleration in inflation was recorded in Belgium and Austria, as well as some northern countries. The problem is that there are twice more facts of decline in inflationary pressures than facts of growth.
It is possible that to activate inflation the ECB with strengthen QE - not now, of course, but later. It is highly likely.
The main risk for the euro/dollar remains the Fed meeting, but first we should pay attention to the statistics on the US CPI. This is important for understanding the future steps of the regulator of the New World.
RoboForex Analytical Department
Attention!
Forecasts presented in this section only reflect the author’s private opinion and should not be considered as guidance for trading. RoboForex bears no responsibility for trading results based on trading recommendations described in these analytical reviews.