Two days before a critical ECB meeting that is expected to reveal how the European Central Bank plans to help its struggling members, the Euro started climbing. The gains remained stable during Tuesday’s Asian session. Investors are expecting the ECB to announce a stimulus plan that will help its members improve their situations moving forward. One possible option that has been hinted to by ECB President Mario Draghi is the purchase of short term bonds that are maturing in three years or less.
Despite the strengthening of the Euro at the start of this week, the region’s outlook remains dim as Moody’s downgraded the region’s outlook to negative from its former Aaa status. The negative ratings reflect the agency’s concern negative outlook towards Europe’s larger countries, specifically the Netherlands, Germany, France and the UK. Moody’s did say that the ratings could return to stable if the outlooks for these key countries returns to stable. Equally distressing is the fall in output from Europe in August, stretching the region’s contraction to 13 months. Germany was the hardest hit as new orders for German exports hit the lowest level in over three years.
The ECB will meet on Thursday of this week and the Federal Reserve will begin another two day gathering on September 12.