Euro Muted After ECB Stays Pat On Interest Rates
July 21 2016 - 4:14AM
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The euro showed muted trading against its major currencies in
European deals on Thursday, after the European Central Bank left
its key interest rates unchanged, as policymakers wait for more
data to assess the impact of the Brexit on the Eurozone.
The 25-member Governing Council, led by ECB President Mario
Draghi, left the benchmark interest rate - the refi, unchanged at a
record low zero percent, after the policy session in Frankfurt.
The deposit rate was kept steady at -0.40 percent and the
marginal lending facility rate was maintained at 0.25 percent.
The Governing Council continues to expect the key ECB interest
rates to remain at present or lower levels for an extended period
of time, and well past the horizon of the net asset purchases, the
bank said in a statement.
Further, the bank confirmed that the monthly asset purchases of
EUR 80 billion are intended to run until the end of March 2017, or
beyond, if necessary, and in any case until it sees a sustained
adjustment in the path of inflation consistent with its inflation
aim.
Draghi is widely expected to signal more stimulus during his
post-decision press conference set to begin at 8.30 am ET.
The euro showed mixed trading against its major opponents in
Asian deals. While the euro rose against the greenback and the yen,
it declined against the pound. Against the franc, it held
steady.
The single currency that reversed from an early 2-day high of
1.1047 against the greenback held steady thereafter. The pair was
valued at 1.1013 when it closed yesterday's deals.
After climbing to near a 4-week high of 118.46 against the yen
in the previous session, the euro declined to a 6-day low of 116.14
and traded steadily afterwards. At yesterday's close, the pair was
worth 117.71.
Data from the Ministry of Economy, Trade and Industry reported
that Japan's all industry activity dropped for the first time in
three months in May.
The all industry activity index slid 1 percent month-on-month in
May, reversing a 0.8 percent rise in April. This was the first
increase in three months but slightly slower than the expected drop
of 1.1 percent.
The common currency eased back from an early 6-day high of
1.0904 against the Swiss franc, with the pair trading around
1.0877. On the downside, 1.075 is likely seen as the next support
level for the euro-franc pair.
Data from the Federal Customs Administration showed that
Switzerland's trade surplus declined in June.
The trade surplus fell to CHF 3.5 billion from CHF 3.8 billion
in May.
The euro showed a brief recovery to 0.8382 against the pound at
4:35 am ET, from an early 6-day low of 0.8302, and held steady
since then. The euro was trading at 0.8333 versus the pound at
Wednesday's close.
Data from the Office for National Statistics showed that British
retail sales declined more than expected in June.
Retail sales volume including auto fuel fell 0.9 percent
month-on-month in June, offsetting a 0.9 percent rise in May. This
was the biggest fall seen so far this year and larger than the
expected fall of 0.6 percent.
Looking ahead, Canada wholesale sales data for May, U.S. weekly
jobless claims for the week ended July 16, U.S. FHFA house price
index for May, U.S. existing home sales data for June, leading
indicator for June and Philadelphia Fed manufacturing index for
July are set to be published in the New York session.
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