Euro Mixed After ECB Minutes Show Changes In Forward Guidance Premature
February 22 2018 - 4:38AM
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The euro came under pressure against its most major counterparts
in the European session on Thursday, after minutes from the
European Central Bank's latest monetary policy meeting showed that
the policy makers agreed that it was too soon to adjust forward
guidance.
"Changes in communication were generally seen to be premature at
this juncture, as inflation developments remained subdued despite
the robust pace of economic expansion," the minutes from the
monetary policy meeting held on January 24-25 showed.
The members observed that monetary policy would continue to
develop according to the evolving state of the economy as per the
ECB's forward guidance, with a view to avoiding abrupt or
disorderly adjustments at a later stage.
The members agreed that the Governing Council's communication on
monetary policy would evolve naturally in line with the ECB's
forward guidance, if inflation make further progress towards its
goal.
"The language pertaining to the monetary policy stance could be
revisited early this year as part of the regular reassessment at
the forthcoming monetary policy meetings," the minutes showed.
Survey data from Ifo institute showed that Germany's business
confidence weakened in February.
The business sentiment index fell more-than-expected to 115.4
from 117.6 in January. The score was seen easing to 117 in
February.
The euro traded mixed against its major opponents in the Asian
session. While it held steady against the pound and the franc, it
fell against the greenback and the yen.
The single currency dropped to a 3-day low of 1.1506 against the
franc, after advancing to 1.1544 at 3:00 am ET. On the downside,
1.14 is likely seen as the next support for the euro.
Data from the Federal Statistical Office showed that Swiss
industrial production expanded for the third straight quarter in
the three months ended December.
Industrial production advanced 8.7 percent year-over-year in the
fourth quarter, but slower than third quarter's 9.2 percent
spike.
The 19-nation currency slipped to a 3-month low of 131.29
against the yen, compared to Wednesday's closing value of 132.37.
The euro is poised to challenge support around the 130.00
level.
Following a 2-day high of 0.8863 hit at 6:30 am ET, the euro
reversed direction and pulled back to 0.8832 against the pound.
Further downtrend for the euro is likely to see it finding support
around the 0.86 mark.
The second estimate from the Office for National Statistics
showed that the UK economy grew less than estimated in the fourth
quarter, partly reflecting revision to production output.
Gross domestic product expanded 0.4 percent sequentially instead
of 0.5 percent estimated initially. GDP had advanced 0.5 percent in
the third quarter.
The euro weakened to 1.6747 against the kiwi and 1.5689 against
the aussie, off its early high of 1.6800 and a 6-day high of
1.5756, respectively. Next key support for the euro is likely seen
around 1.65 against the kiwi and 1.54 against the aussie.
On the flip side, the common currency climbed to 1.2315 against
the greenback, from a 10-day low of 1.2260 hit at 1:45 am ET. The
euro is seen finding resistance around the 1.24 mark.
The euro spiked up to a 2-year high of 1.5676 against the
loonie, from an early 2-day low of 1.5569. If the euro extends
rise, 1.59 is seen as its next resistance level.
Looking ahead, U.S. leading indicators for January are due
shortly.
At 10:00 am ET, New York Fed President William Dudley speaks
about the economic situation in Puerto Rico and the United States
Virgin Islands, following Hurricanes Irma and Maria, at a press
briefing hosted by the Federal Reserve Bank of New York.
Atlanta Fed President Raphael Bostic will speak at the Banking
Outlook Conference hosted by the Federal Reserve Bank of Atlanta at
12:10 pm ET.
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