Euro Exhibits Sharp Correction on ECB Member’s Comments
Analyzing Global Foreign Exchange Indicators on October 16
Euro declines amid dovish comments by ECB policymaker
The euro fell against the US dollar on October 16, 2015, after falling sharply in the previous session on investors’ concerns about consumer inflation figures. Also, dovish remarks by ECB (European Central Bank) member Ewald Nowotny increased anticipation of an expansion in the QE (quantitative easing) program by the central bank. Nowotny stated that the Eurozone inflation seemed to be missing its target amid high appreciation in the euro-US dollar pair. The euro touched levels nearing 1.15 on October 15, 2015, before falling sharply by more than 100 pips (or percentage in points) on an intra-day basis. The problems plaguing the euro of low inflation and weak economic growth are seemingly catching up with the value of the euro.
Consumer inflation releases in line with forecasts
Consumer inflation for the Eurozone fell for the first time in six months by 0.1% on an annual basis, which was in line with expectations and a rise of 0.1% in the previous month of August. On the other hand, core inflation in September remained in line with the previous month, releasing at 0.9%. The trade surplus in the Eurozone widened to 11.2 billion euros in August against 7.4 billion euros in the same month last year. Exports rose by 6% on a year-over-year basis while imports grew at a slower pace of 3% annually.
Impact on the market
Looking at the October 16 performance of currency-based ETFs linked to the Euro, the ProShares UltraShort Euro ETF (EUO), which is inversely linked to the euro, finished positively at 0.43%. In contrast, the Guggenheim Currency Shares Euro ETF (FXE), which has a direct relation to the euro, ended on a negative note at -0.21%.
The ADRs (American depositary receipts) from the Eurozone, especially banking ADRs, were trading on a positive note as Deutsche Bank AG (DB) and Banco Santander (SAN) ended higher by 1.0% and 2.1%, respectively. Philips Kon (PHG), a Dutch company, ended October 16 nearly flat, rising slightly by 0.08%.
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