Lagarde has previously said that the ECB is ready to deploy additional monetary stimulus to support the eurozone’s economic recovery.

EUR/USDThe euro rallied this week, gaining 0.90 percent, snapping a two-week losing streak.

European Central Bank President Christine Lagarde recently hinted at a possible change in the bank’s inflation target, noting that given the current low inflation, the concerns facing policymakers are different. This requires a change in the Bank’s current monetary policy strategy that would strengthen the Bank’s monetary policy ability to stabilize the economy when confronted with the lower bound.

Lagarde has previously said that the ECB is ready to deploy additional monetary stimulus to support the eurozone’s economic recovery.

“The ECB stands ready to adjust all its instruments as necessary to ensure that inflation moves towards its target in a sustainable manner, in line with its commitment to symmetry,” it said.

Lagarde also linked deflationary forces to the euro’s late appreciation, which has strengthened since May despite losing some ground last month. She said the bank would continue to monitor the eurostrength, although it did not indicate any possible intervention in the foreign exchange market.

The number of coronavirus cases in Europe is currently soaring, with 5,042,794 reported cases (including Russia) and 222,765 total deaths. In the Eurozone, Spain leads the number of infected with a total of 769,188 cases and 31,791 deaths, followed by France, the United Kingdom and Italy.

Fears of a second wave are rising as cases rise in countries such as Spain, Germany and France. Governments are already announcing measures to limit the spread of the virus, with German Chancellor Angela Merkel announcing the government’s plan to act regionally this time to avoid another nationwide lockdown, while the UK government decided to impose a curfew on pubs, bars and restaurants, a move that has been heavily criticized representatives of the leisure sector.

On Monday, markets learned that services sentiment came in at -11.1 in September, an improvement from -17.2 the previous month and much better than analysts had expected, as they had expected it to come in at -15.3. In line with analysts’ expectations, consumer confidence was at -13.9, improving from August’s -14.7, while industrial confidence remained at -11.1, below analysts’ expectations of -9.5 but better than August a figure that stood at -12.8. Business Climate was at -1.19, improving from August’s -1.34 and better than the -1.38 that analysts were expecting.

On Thursday, Markit Economics released manufacturing PMI for September, which came in at 53.7, signaling an expansion in the manufacturing sector and unchanged from the previous month’s report.

Eurostat confirmed that Europe is now facing deflationary pressures as the producer price index managed to fall by 2.5 percent in August (year-on-year) after a 3.1 percent drop in the previous month. Analysts in the survey expected it to fall by 2.7 percent. In monthly terms, the producer price index rose 0.1 percent in August, remaining in line with analysts’ expectations and below the previous month’s level of 0.7 percent.

The unemployment rate rose slightly to 8.1 percent in August, in line with the expectations of polled analysts and above 8 percent from the previous month.

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