EURUSD tumbled this morning, erasing the gains following US payrolls weakness on Friday, after reports that officials familiar with the matter said the ECB’s draft projections show slower consumer-price growth in the three years through 2019 versus March forecasts.
“You saw the German bund jump with stocks right after that news, clearly,” said Nacho Lopez, an institutional sales officer at brokerage Ahorro Corp. in Madrid, “It means we may hear a more conservative tone from the ECB at tomorrow’s meeting.”
And EURUSD plunged...
As Bloomberg notes, a downgrade to the inflation outlook would back the view of top policy makers, including President Mario Draghi and Chief Economist Peter Praet, that they must be extremely cautious in communicating and implementing any exit from monetary stimulus. The Governing Council is set to debate how to balance policy for the euro area as economic growth solidifies but inflation remains muted.