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Euro Declines As ECB Meeting Approaches

Laura Brodbeck

The euro fell modestly on Thursday morning with the European Central Bank meeting set to begin later in the day.

The common currency traded at $1.3647 at 4:50 GMT as investors speculated that the bank could verbally try to devalue the euro.

Last month the ECB unveiled a series of policy changes aimed at helping to kickstart the region’s sputtering economy. The bank reduced its interest rates, taking the deposit rate below zero, and introduced a new series of targeted loans that will promote banks’ lending to businesses.

Now, investors don’t expected the bank to make any sudden moves as it will need time to evaluate the effect of the current easing package on the economy. Instead, it is the press conference after the meeting that will be in the spotlight.

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Many are wondering whether or not ECB President Mario Draghi will leave the door open for further easing when he speaks following the meeting.

Investors will be waiting to see whether or not Draghi drops any hints about the possibility of a large scale quantitative easing program, or warns about the euro’s recent strength.

The bloc has been struggling recently as economic data points to a slowdown in the region’s recovery.

The Wall Street Journal reported that the region’s producer prices fell one percent from May of last year, suggesting that eurozone inflation will remain dangerously low in the near term, something that has been a hot topic in the bloc.

Data out this week showed that eurozone inflation remained at 0.5 percent, far below the ECB’s two percent target and dangerously close to zero. 

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