Euro falls vs dollar as eurozone inflation goes negative

 01 Mar 2016 - 7:48

Euro falls vs dollar as eurozone inflation goes negative
 

New York: The euro weakened against the dollar Monday pressured by a return of negative inflation in the eurozone, while the safe-haven yen benefited from a disappointing G20 finance meeting.

The euro fell to $1.0876 around 2200 GMT from $1.0935 at the same time Friday.

Consumer prices tumbled in the 19-nation currency bloc in February, pushing inflation to a negative 0.2 percent, official data showed, and intensifying pressure on the European Central Bank to announce further stimulus.

"The latest CPI data from the region... suggests that deflation is only strengthening the region and that ECB will likely need to expand its monetary policy to combat the conditions on the ground," said Boris Schlossberg of BK Asset Management.

The eurozone inflation rate's negative turn was unexpected, but an 8.0 percent dive in energy prices was largely to blame.

"The indication of price pressures receding into deflation territory merely confirms what we've known for several weeks now: Markets are fully committed to the belief that the ECB will cut its deposit rate by 10 basis points at its next meeting" on March 10, said Christopher Vecchio, currency analyst at DailyFX.

A meeting of the finance chiefs of the Group of 20 big economies in Shanghai ended Saturday with no major plan to address the slowdown in the global economy.

Global markets reacted to the G20 statement "with disappointment as officials stopped short of lending fresh support to a sputtering world economy," said Joe Manimbo of Western Union Business Solutions.

China's central bank on Monday fixed its rate for the yuan currency at a four-week low, despite comments Friday by governor Zhou Xiaochuan that there "is no basis for persistent renminbi depreciation from the perspective of fundamentals."

The yuan finished lower against the greenback at 6.5520 yuan per dollar, compared with 6.5372 Friday.

2200 GMT Monday Friday

EUR/USD 1.0876 1.0935

EUR/JPY 122.59 124.63 

EUR/CHF 1.0857 1.0896

EUR/GBP 0.7815 0.7883

USD/JPY 112.72 113.97

USD/CHF 0.9983 0.9963

GBP/USD 1.3917 1.3873

AFP