Futures Market News
Euro remains competitive with dollar as ECB prepares for Thursday meeting
Jul 03, 2012 11:46 AM
Tuesday saw the common currency of the European Union keep up with the U.S dollar, Reuters reports.
Policy makers with the European Central Bank are slated to convene on Thursday and conjecture indicates the financial institution will reduce interest rates from 1.0 percent to 0.75 percent. Skepticism for results from last week's two-day Brussels pact to help euro zone nations is growing stronger.
"One opinion is that the rate cut might boost risk sentiment and reduce the risk premium in the euro which could be positive, but a lower rate in itself would be euro negative," fund manager Jaco Rouw with ING Investment Management told Reuters. "In the longer term, based on economic developments, there is still room for more monetary easing in Europe so we would position for a weaker euro."
Speculation also is mounting that the U.S. Federal Reserve is preparing to implement another round of monetary easing after economic data indicated manufacturing decreased the most in nearly 36 months.
Producer price inflation in the 17-nation euro zone dropped to its slowest two years in May, which The Wall Street Journal reports is poised to prompt the ECB to slash interest rates.
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