New measures needed to boost inflation – Nowotny

Nowotny’s comments contrast with remarks three weeks ago when he said core inflation signals an “equilibrium” in prices, and suggests that policy makers are becoming more concerned about the outlook for the economy.

US stocks also rose, snapping a two-day losing streak and forming a trading correlation with the dollar that confused many investors. A set of downbeat US economic indicators overnight, including retail sales and Wal-Mart Stores Inc.’s WMT, -10.04% guidance, sent the dollar into tailspin across the board.

The euro, shared by 19 members of the European Union, tumbled after ECB policymaker Ewald Nowotny said the bank must search for more ways to stimulate the Eurozone economy, prompting speculation the ECB might widen the scope of its current programme.

The Euro came under heavy sell pressure in the wake of comments made by an European Central Bank official regarding the economic need for additional stimulus.

“Moreover, the recovery in the USA dollar we expect for the coming months is relatively modest”.

Fed-funds futures are pricing in a 54% chance of a Fed rate hike at or before the Fed’s April meeting, according to CME Group’s data (http://www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html).

A Fed hike would have greater global repercussions than in the past because of how the world has adjusted to zero rates, Constancio added, noting that central banks have no experience of reversing such highly accommodative policy.

The dollar’s appreciation since July 2014 has been driven by the prospect of higher interest rates in the U.S. Higher rates would increase the return on dollar-held deposits and presumably cause it to strengthen.

After falling to a low of 118.05, the US dollar rebounded strongly against the Japanese Yen to end the day virtually unchanged.

It recently traded at Yen118.

The greenback USDJPY, -0.08% was at ¥119.00, compared with ¥118.86 late Wednesday in New York.

In Britain, the pound is weak from yesterday’s close at $1.9954 Canadian. September’s U.S. Consumer Price Index data printed at 0.0% from the forecast -0.1% y/y and CPI ex food and energy printed at 1.9% when the market was forecasting 1.8% y/y. The Wall Street Journal Dollar Index, which gauges the buck against a basket… The dollar gauge is off 0.5% so far this week and 1.2% so far in October.