Euro Slips Ahead of European Central Bank Rate Decision
Euro declined versus the US dollar at the forex markets ahead of the European Central Bank (ECB) rate decision on Thursday. Trading data revealed that the US dollar is relatively firm following the Federal Reserve’s 25 basis point interest rate cut on Wednesday.
The Dollar Index recovered from the slippage through the 20-day moving average yesterday (98.65) and set the session high near 98.95 in North American dealings.
The euro fell below $1.16, its weakest level since mid-October, pressured by a stronger dollar after the Federal Reserve lowered the federal funds rate by 25 basis points, as expected. However, Chair Powell signalled that the central bank may not cut rates again this year.
The ECB meets Thursday as the market is convinced policy will remain unchanged. The ECB will also have Q3 GDP in hand. Economic growth is expected to edge up by 0.1% in Q3, the same as Q2. Spain reported its Q3 GDP earlier today.
Spain GDP rose by 0.6% after 0.8% growth in Q2 and 0.6% in Q1. Meanwhile, despite the uninspiring economic activity, the unemployment rate continues to bounce along the 6.2%-6.3% trough. The September reading is due before the conclusion of the ECB meeting.
ECB is expected to keep borrowing costs unchanged for a third consecutive meeting on October 30th, with no further policy moves anticipated in 2025. Policymakers remain cautious amid signs of economic resilience and moderating inflation.
In the Eurozone, inflation edged up to 2.2% in September from 2.0% over the previous three months, while GDP is estimated to have grown 0.1% in the third quarter, matching the pace seen in the second quarter. Zenith Bank: Investment Firm Sets N88.8 Target Price Ahead of Q3
