The euro drops after ECB decisions

October 23, 2015

The main currency pair is trading down on Thursday afternoon after the meeting of the European regulator. The euro declines in tandem with the US dollar. The current quotation of the instrument is 1.1317. The October meeting of the European Central Bank has been completed and its results have not yet found anything fundamentally new to the capital markets.

ECB interest rates remained at 0.05% per annum, as before. For almost a year, the indicator has held at this record low. The interest rate on deposits is still 0.2%, and the rate on margin loans is kept at 0.3%.

At the moment, there is no more information - later the regulator will publish the comments of the ECB head, Mario Draghi. Most likely, his speech will be restrained and calm, the European Central Bank will emphasize making every effort to achieve fiscal stability in the region and, if necessary, extend the stimulation.

However, it is perfectly clear that the time to increase QE has not come, despite new evidence of deflation in the euro zone. Quantitative easing in the frames of the QE program gives effect, but because of low energy prices, inflation keeps slipping into negative territory. This can either be just accepted, or money could be poured into the system, thus waiting for a period of stability. ECB went the second way, because the first one has already been tested and found to be ineffective.

The Eurozone economy is still growing at below average levels, inflationary risk is minimal, external risks are quite tangible and painful. So far that is everything. Now we have to wait for the comments of the ECB.

US data tonight is not bad. Labour market data was published. A weekly report on the number of claims for unemployment benefits demonstrated a level of 259 thousand, against the forecast of 265 thousand.

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