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The continued strengthening of the euro "would require further monetary policy accommodation," ECB President Mario Draghi has said. "That's an important dimension for our price stability."
Draghi's comments came at a meeting of the IMF and after the euro has increased 6% over the past year to $1.3885.
Draghi said that the euro's strength has been an important factor in causing eurozone inflation to drop to 0.5% on year.
CPI is even negative in some parts of the bloc, sparking increasing concerns about deflation and prompting the ECB to discuss unconventional policy such as quantitative easing.
Meanwhile, German Finance Minister Wolfgang Schaeuble and Bundesbank President Jens Weidmann have tried to talk markets out of being overly excited that the eurozone crisis is over. "It's good that markets have become more confident again," said Schaeuble. "But I've said that in parts they're already exaggerating again."
The greenback hits session lows across the board following the dovish tilt to the FOMC minutes, with the takeaway being members seemed in less of a hurry to hike rates than the spin following the policy statement and Yellen press conference that day in mid-March.
Higher on the session are the euro (FXE +0.4%), pound (FXB +0.1%), swissie (FXF +0.1%), aussie (FXA +0.2%), and loonie (FXC +0.4%). Flat on the session after being down earlier is the yen (FXY -0.2%).
The euro pops 30 pips higher with the ECB leaving policy on hold following plenty of chatter leading up to today's meeting suggesting further stimulus was coming. After the big move up, the euro is flat on the session and buying $1.3775.
ECB chief Mario Draghi's press conference beings at 8:30 ET.
The euro continues to slip a bit following yesterday's multiple signals on additional stimulus being considered by the ECB. "We haven't exhausted our maneuvering room" on interest rates, Bank of Finland Governor Erkki Liikanen told the WSJ, and the typically hawkish Jens Weidmann from the Bundesbank didn't rule out QE or negative interest rates in an interview with news agency MNI. Another governing council member, Slovakia's Jozef Makuch expressed similar sentiments.
Also speaking yesterday, ECB chief Mario Draghi was less specific about measures, but reiterated the bank's commitment to do what is necessary to prevent deflation.
Eurozone flash manufacturing PMI has slipped to 53 in March from 53.2 in February and missed consensus that was also 53.2.
Services declined to 52.4 from 52.6 and vs 52.6.
Composite output fell to 53.2 from 53.3 and vs 52.6.
Manufacturing output edged up to 55.4 from 55.3.
The eurozone enjoyed its best quarter for business activity since Q2 2011, says Markit, with the PMI survey signalling a 0.5% increase in Q1 GDP after growth of 0.3% in Q4.
However, deflation remains a concern, Markit adds, especially in the periphery. With prices falling again in March, the argument for further stimulus remains, "especially if the rate of growth of activity cools again in April."
German flash manufacturing PMI has dropped to 53.8 in March from 54.8 in February and missed consensus of 54.7.
Services fell to 54 from 55.9 and vs 55.8.
Manufacturing output declined to 57 from 57.4.
Composite output dropped to 55 from 56.4.
Staffing rose for a fifth straight month, although "the increase was largely driven by hiring efforts at service providers," says Markit, "while manufacturing firms only reported a fractional rise in workforce numbers."
Still, the data points to GDP growth of up to 0.7% in Q1, Markit says.
The euro comes back down after jumping a bit following the French PMI and is flat at $1.3795. The DAX is -0.45%. (PR)
French flash manufacturing PMI has climbed to a 33-month high of 51.9 in March from 49.7 in February and topped consensus of 49.8.
Services rose to 51.4 from 47.2 and vs 47.9.
Manufacturing output grew to 52.8 from 50.8.
Composite output increased to 51.6 from 47.9.
"Improving conditions both at home and abroad were reported to have contributed to expansion, although there was further evidence that price discounting had been necessary to support sales," says Markit.
The euro takes a jump and is +0.2% at $1.3822, while the CAC 40 (EWQ) is -0.2%. (PR)
The FOMC does the ECB a favor with its hawkish tilt, taking the euro (FXE) down 0.8% to $1.3827. A check of other currencies finds them lower across the board vs. the greenback: Cable (FXB) -0.4%, yen (FXY) -1.1%, Swiss franc (FXF) -0.9%, loonie (FXC) -1%, aussie (FXA) -1%.
After hitting a 2-1/2 year high in morning action, the euro (FXE -0.3%) does an about face as Mario Draghi tries to hold back the waves, calling the euro "increasingly relevant in our assessment of price stability."
"Any material risk of inflation expectations becoming unanchored will be countered with additional monetary policy measures."
ECB members keep trying to talk down the currency, but the euro keeps moving ahead, up 0.4% this morning and buying $1.3956 - the most since October 2011.
Yesterday, George Soros - launching his new book "The Tragedy of the European Union" - compared the stagnation in the EU to that of Japan. He no doubt sees the strength of the euro in the face of economic weakness as similar to that of the yen during Japan's malaise - a failure of policymakers to come to grips and deal with what confronts them.