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Euro Declines to Lowest Since July Before ECB Policy Decision

Posted by Chris Advincula on Oct 20, 2016 6:45:05 AM

EUR.10.20.2016.jpg

> Draghi could 'downplay' ECB taper talk: ING's Krpata

> Economists forecast officials will leave rates at record lows

(Oct 20 Bloomberg) The euro fell to its lowest level in almost three months against the dollar before the European Central Bank announces its policy decision.

The single currency held a two-day decline as markets braced for the central bank to hint at further stimulus measures. ECB President Mario Draghi may talk down speculation that officials are considering tapering the institution's 1.7 trillion-euro ($1.9 trillion) quantitative-easing program, analysts say.

All 70 economists surveyed by Bloomberg forecast the ECB will leave the deposit rate at a record low of minus 0.4 percent, while a majority of respondents to a separate survey predict the ECB will wait until December to extend its asset-purchase program. Draghi is scheduled to speak to reporters at 2:30 p.m. in Frankfurt.

"What will be very interesting is Draghi's press conference," said Petr Krpata, a London-based foreign-exchange strategist at ING Groep NV. He could likely "downplay the idea of tapering and he may potentially hint at prolonging the QE program. So that on its own will be euro negative' even though the extent of the decline could be limited, Krpata said.

The euro was little changed at $1.0973 as of 8:47 a.m. London time, having earlier dropped to $1.0952, the lowest since July 25. The currency has weakened 2.3 percent this month against the dollar.

Bloomberg: (by Annoja Debnath)

Topics: ECB, EURUSD, EURO, Mario Draghi, Forex, ECB monetary policy

 

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