FX round-up: Euro loses ground against the dollar ahead of ECB meeting
The euro was a little weaker against its major rivals on Monday in fairly quiet trade, as investors looked to the European Central Bank meeting later in the week, amid expectations that further stimulus measures could be announced.
“FX markets have been subdued today with most pairs stuck in narrow ranges,” said David Morrison, market analyst at SpreadCo.
Earlier, ECB policymaker Nowotny said governments in the Eurozone may need to introduce looser fiscal policies in order to secure economic growth.
"This applies to structural reforms and fiscal policy," he said in an interview with Polish newspaper Rzeczpospolita.
At 1430 BST, the euro was trading down 0.4% against the pound at £0.7322 and 0.2% lower against the dollar at $1.1340.
The dollar was flat against the yen and 0.2% weaker against the pound, at JPY119.39 and £0.6459, respectively.
The European Central Bank will hold its next monetary policy meeting in Malta on Thursday and investors will be keen to hear what the Bank has to say about inflation after the rate fell below zero last month for the first time since March.
“The threat of the EUR/USD testing 1.15 remains in place. Tomorrow’s ECB Bank Lending Survey will probably show a further modest improvement in loan demand and the ECB will probably do no more than sound dovish, which wouldn’t get in the way of the euro’s gradual appreciation,” said Societe Generale strategist Kit Juckes.
“The generally trendless markets will probably also keep USD/JPY range-bound ahead of the BoJ meeting at the end of the month,” he said.
Juckes said the market reaction to BoJ action, or indeed inaction, will tell us a fair bit about sentiment, with the danger being that the reaction to yet more quantitative easing is only modest.