Eurozone lending continues to be a problem, and that has some thinking that the ECB will have no choice but to ease monetary policy further when they meet next week. It’s also not helping that China is slowing down, and that it appears that Germany isn’t going to be able to kickstart the economy all on its own.
The latest numbers on lending in the eurozone paint a picture of a credit situation that is still very clogged. Lending to firms and households in the 18-nation currency region dropped in January, even though the European Central Bank has been taking steps to increase liquidity. The latest inflation figure also comes in at right around 0.8 per cent, which is well below the ECB target of 2 per cent.
With all of this disappointment in how things are going with the eurozone economy, there is a great deal of speculation that the ECB will have to take more steps to stimulate the economy at its next meeting. That has the euro weakening. Also putting pressure on the euro is general risk aversion, brought on by the slowdown in China.
At 13:57 GMT EUR/USD is down to 1.3673 from the open at 1.3686. EUR/GBP is down to 0.8204 from the open at 0.8209. EUR/JPY is down to 139.5555 from the open at 140.0915.
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