Euro Lower Ahead Of European Central Bank Rate Announcement
October 19 2016 - 5:17AM
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The euro declined against its major counterparts in European
trading on Wednesday, ahead the European Central Bank's monetary
policy announcement on Thursday, with investors looking for any
signs to favor an extension to the QE programme scheduled to end in
March 2017.
The bank is expected to keep its key rates on hold at its
meeting in Frankfurt, following some positive signs of
inflation.
The refinancing rate stands at a record low of zero percent, the
deposit rate is at minus 0.4 percent and marginal lending facility
is at 0.25 percent.
Investors await President Draghi's customary post-meeting press
conference for more clues about the time frame of the central
bank's €80 billion a month bond buying programme, which will
currently run until March.
The currency was also weighed by falling European stocks, as
mixed earnings updates induced some caution ahead of the third and
last presidential debate between Democratic nominee Hillary Clinton
and Republican nominee Donald Trump taking place tonight at the
University of Nevada.
In economic front, data from Eurostat showed that Eurozone
construction output declined for the first time in five months in
August.
Construction output contracted 0.9 percent month-over-month in
August, reversing a 1.5 percent gain in the previous month.
The currency showed mixed performance in the Asian session.
While the euro held steady against the franc and the yen, it
advanced against the greenback and the pound.
Pulling away from an early high of 1.1005 against the greenback,
the euro weakened to near a 3-month low of 1.0961. If the euro
extends decline, 1.08 is likely seen as its next support level.
The single currency reversed from its prior high of 1.0881
against the Swiss franc, dropping to near a 3-week low of 1.0848.
Continuation of the euro's downtrend may see it challenging support
around the 1.06 mark.
The euro, having advanced to 114.16 against the Japanese yen at
10:30 pm ET, declined to more than a 3-week low of 113.33. The euro
is seen finding support around the 112.00 mark.
Data from the Ministry of Economy, Trade and Industry showed
that Japan's all industry activity expanded for the third straight
month in August.
The all industry activity index grew 0.2 percent on a monthly
basis in August, the same rate as registered in July and matched
economists' expectations.
Following a high of 0.8958 hit at 5:45 am ET against the pound,
the euro weakened to 0.8915. The euro is poised to find support
around the 0.86 zone.
Figures from the Office for National Statistics showed that
British unemployment rate held steady in August, while jobless
claims rose less-than-expected in September.
The ILO jobless rate came in at 4.9 percent in the three months
ended August, unchanged from the three months to July. The figure
also matched consensus estimate.
Extending early slide, the euro fell to near a 3-month low of
1.4337 against the loonie and a 16-month low of 1.4278 against the
aussie. The euro is seen finding support around 1.42 against the
loonie and 1.40 against the aussie.
The euro fell back to 1.5221 against the kiwi, heading to pierce
its early near a 4-week low of 1.5192. The next possible downside
target for the euro-kiwi pair is seen around the 1.50 area.
Looking ahead, at 9:15 am ET, U.K. Finance minister Philip
Hammond is scheduled to deliver a speech in parliament, in
London.
At 9:30 am ET, European Parliament's Brexit negotiator Guy
Verhofstadt is expected to speak at conference on "Future of EU
budget, reform of EU institutional set-up" in Brussels.
The Bank of Canada's interest rate decision is due at 10:00 am
ET .The economists expect the bank to hold rates at 0.50
percent.
Subsequently, the Bank of Canada Governor Stephen Poloz and
Senior Deputy Governor Carolyn Wilkins will hold a press conference
following the bank's interest rate decision and release of its
monetary policy report at 11:00 am ET in Ottawa.
At 1:00 pm ET, Bank of England Chief Economist Andy Haldane is
expected to speak on "QE - The story so far" at Cass Business
School, in London.
At 1:30 pm ET, European Central Bank board member Daniele Nouy
is expected to speak at the European Financial Roundtable organised
by Deutsche Bank in Frankfurt.
At 2:00 pm ET, Federal Reserve issues the Beige Book of economic
condition in Washington.
At 4:15 pm ET, Bank of Canada Governor Stephen Poloz and Senior
Deputy Governor Carolyn Wilkins will testify before the Senate
Standing Committee on Banking, Trade, and Commerce, in Ottawa.
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