Markets

European Central Bank Rate Cut Talk Rressures Euro, Lifts Bunds

 Euro  notes(Reuters) – The euro slipped against the dollar and German bond prices rose on Thursday on investor positioning for more monetary easing by the European Central Bank following a run of weak economic data.

Those expectations are likely to be reinforced when euro zone inflation data for April is released at 0900 GMT (5 a.m. EDT), which is expected to show an annual rate of just 1.2 percent, well below the central bank's target range.

"I think it will confirm in everyone's mind there is no inflation risk," said Sarah Hewin, senior economist at Standard Chartered Bank, reports Reuters.

The euro slipped 0.2 percent to $1.2860, having hit a six-week low of $1.2843 on Wednesday. The main German bond futures contract was 10 ticks higher at 144.78.

European shares were supported by the rate cut expectations but opened little changed after hitting fresh multi-year highs on Wednesday. The FTSE Eurofirst .FTEU3 index of top European shares was 0.1 percent lower in early trade.

Earlier, Asian markets had risen on news that Japan's economy grew 0.9 percent in the first quarter, the quickest pace in a year and beating expectations for a growth rate of 0.7 percent.

"There's now proof that Abenomics is working and that the economy is on a solid footing." said Yoshiki Shinke, senior economist, Dai-Ichi Life Research Institute in Tokyo.

However, Japan's Nikkei index ended down 1 percent after having hit a fresh 5-1/2-year high though it is up nearly 44 percent so far this year.

Leave a Reply