European Central Bank official says inflation ‘clearly’ below target

In a separate report, Eurostat said that consumer prices in the eurozone fell 0.1% on an annual basis in September, confirming the previous flash estimate.

The eurozone first set out on a round of quantitative easing in January, promising €60 billion ($68.72 billion or £44.38 billion) in monthly purchases of both private and public assets (largely government bonds) to try to boost the bloc’s flagging growth and inflation rates.

Benchmark 10-year Treasury notes were down 3/32 in price to yield 2.0316 percent, from 2.021 percent late Thursday.

“One has to say that these are elements the central bank can not influence, but also core inflation rates are clearly below our target”.

Numerous market based indicators are pointing that Dollar might weaken further after this month’s FOMC policy decision which is very much likely to sound dovish.

Since the multi-month run higher in the dollar ended in March of this year, the single currency has always struggled to pull off a sustained move above the 1.15 level against the dollar.

The US dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was last at 94.02 after falling to lows of 93.84 overnight, the lowest level since August 26. The pace of recovery in emerging market currencies has been the strongest seen this year, but this must be remembered that this has come after a sustained period of weakness, characterised by limited and marginal periods of correction. However, he also noted that developments in China and emerging market economies have the potential to hurt the nation’s economy.

“If we observe that the evolution of prices is not compatible with the objective of the European Central Bank, the European Central Bank could do what it said it will do, extend the program and non-conventional measures”, Bank of Spain Deputy Governor Fernando Restoy said on Thursday in Madrid.

Further strong housing reports and signs of resilience in the U.S economy could add to expectations for a rate increase from near zero in December, though a few economists are already looking to early 2016 as more likely.

It “will certainly spice up interest in next Thursday’s European Central Bank policy meeting”.