The common currency Euro plummeted versus its main rival the U.S. Dollar after officials of the European Central Bank (ECB) indicated that they might be willing to take additional action to lower bond yields in the Eurozone and to boost inflation. Benoit Coeure, a member of the ECB’s executive board, said the ECB would continue to make asset purchases this and next month because low liquidity was expected later in the summer. Recently, yields on sovereign bonds, especially from Germany, have been rising which impedes the goal of the ECB’s Quantitative Easing measures. Another ECB member, Christian Noyer, pointed out that the ECB had yet to meet its 2% inflation target, yet another indication that the central bank was prepared to take all necessary measures to ensure that QE is effective.
As reported at 9:30 am (BDT) in London, the EUR/USD was trading at $1.1194, a decline of 1.07%; the day’s trading range for the pair was $1.1160 at the low end and $1.1328 at the top end. The EUR/JPY was also lower at 134.4570 Yen, a loss of 0.97% but a slight recovery from the session low of 133.9350 Yen.
Germany’s ZEW Disappoints
Since March, the Euro has gained nearly 10% against the Dollar, primarily on the backs of higher bond yields from Germany, which is the Eurozone’s growth driver. Earlier today, Germany’s ZEW report, which is an assessment of the Germany economy, was released and was unexpectedly disappointing, a factor that is also weighing on the common currency.
