The Euro tumbled broadly as preliminary inflation data which moved into negative territory sent investors elsewhere on growing speculation that the European Central Bank will now be compelled to ease further. Eurostat reported that CPI fell to -0.1% in August, down from 0.1% and against expectations of a decline to 0. Core inflation, which strips out volatile components, remained flat at 0.9%, in line with expectations. The ECB has a 2% inflation target but actual data hasn’t been anywhere near close in many months. Other data from across the Eurozone area was disappointing as well adding to the pressure on the common currency.
As reported at 11:51 am (BDT) in London, the EUR/USD was trading at $1.1225, a fall of 0.24% while the EUR/GBP was down nearly 0.49% at 0.7389 Pence.
Yellen to Draw Market Focus
Later today, markets will refocus their attention on Janet Yellen, head of the Federal Reserve Bank, who many hope will provide some clarification to last week’s “message” from the Fed. FX traders are still waiting to get some confirmation as to the timing of a rate hike by the US central bank; however, the Fed has used the recent global market turmoil and the slowdown in China as a reason to delay the hike. Yellen had previously said she believed rates would rise this year.