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Hardy: Why the euro will fall further
The euro has its biggest one day decline in 16 months down 1.11 percent against the dollar. The selloff was triggered by weaker data from the Eurozone and less dovish - than expected - comments from the Federal Reserve.
Inflation in the euro region slowed to a four-year low of 0.7 percent from 1.1 percent in September. It’s the ninth straight month the rate has been less than the European Central Bank’s 2 percent ceiling.
Meanwhile unemployment held at a record high of 12.2 percent, fueling speculation the central bank will cut rates at its meeting next Thursday.
While in the US the Federal Reserve maintained its USD85 billion monthly bond purchases, saying unemployment is still too high, while adding the economy is showing signs of “underlying strength.”
Saxo Bank’s John Hardy was surprised by the “vehemence” of the euro’s fall, but said a correction was on the way.
With signs of disinflation, or even deflation across Europe, the market is now looking for dovish comments from the ECB.
He thinks the single currency will continue its fall, 1.3480 being the next band of support before consolidating ahead of Thursdays ECB meeting and after that it could fall to 1.3250 maybe even 1.30.
01:30 minutes
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