The euro dipped today as policy makers continued to talk about possible quantitative easing program that should boost the struggling economy of the European Union. This stance contrasts to the tightening bias of central bankers in the United States and Great Britain.
Luis Maria Linde, European Central Bank member, said that policy makers are concerned about the threat of deflation and QE is not impossible. Earlier, Jens Weidmann, Bundesbank President, said that negative interest rates may be used to bring the high exchange rate down. ECB President Mario Draghi signaled that the central bank is ready to take measures in case inflation falls materially.
This week’s reports from Germany, the main EU economic power, were sending mixed signals. The manufacturing Purchasing Managers’ Index and the business climate deteriorated, while the consumer climate remained steady. Market participants were concerned by the bad part of macroeconomic data, and this weighed on the euro.
EUR/USD dropped from 1.3779 to 1.3744 as of 21:38 GMT today. EUR/GBP sank from 0.8309 to 0.8272, and EUR/JPY went down from 140.58 to 140.47.
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