Euro Falls Amid Reports On ECB's Corporate Bond Purchase Plan
09:47, 21st October 2014
(RTTNews) - The euro came under pressure on Tuesday amid reports that the European Central Bank is considering the purchase of corporate bonds on the secondary market, if it finds that the currency bloc needs more stimulus to shore up growth.
The central bank may take a decision regarding the matter as soon as December with an aim to start the purchases early next year, Reuters reported citing four unidentified sources familiar with the situation. All the four sources also confirmed to the news agency that such plans were being discussed.
The central bank started purchasing covered bonds on Monday, and is expected to begin buying asset backed securities later this quarter.
The bank had already started lending money under a separate four-year lending program, but the demand for the first installment was below economists' expectations.
Meanwhile, the Eurozone 2013 budget deficit was lower than previous estimates, according to data based on European System of Accounts 2010 methodology.
The budget deficit came in at 2.9 percent of GDP in 2013 instead of 3 percent calculated under ESA95 methodology, Eurostat reported.
Reversing from an early 4-day high of 0.7941 against the pound, the euro dropped to an 8-day low of 0.7889. Continuation of the euro's downtrend may lead it to a support around the 0.78 region.
The U.K. budget deficit increased in September from last year, data published by the Office for National Statistics showed.
Public sector net borrowing excluding interventions totaled GBP 11.8 billion in September, an increase of GBP 1.6 billion from the same period of last year.
The euro hit a 4-day low of 136.05 against the yen, off early high of 136.92. The next possible support for the euro is seen around the 135.00 mark.
The single currency slipped to 1.2745 against the greenback, after rising to a 5-day high of 1.2839 at 3:45 am ET. If the euro extends decline, it may find support around the 1.26 level.
The euro declined to near a 4-week low of 1.5929 against the NZ dollar, 6-day low of 1.4289 against the loonie and a 1-week low of 1.4451 against the aussie, off early highs of 1.6077 and 1.4454 and a 4-day high of 1.4600, respectively. Next key support levels for the single currency are seen around 1.58 against the kiwi, 1.435 against the aussie and 1.42 against the loonie.
Looking ahead, U.S. existing home sales for September are due at 10:00 am ET.
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