Euro Weakens After ECB Maintains Rates, Forward Guidance
October 24 2019 - 4:41AM
RTTF2
The euro was lower against its most major opponents in the
European session on Thursday, after the European Central Bank left
its interest rates and stimulus measures unchanged, after cutting
deposit rate and restarting its quantitative easing programme last
month.
The main refinancing rate was retained at its record low 0
percent and the deposit rate at -0.50 percent after the latest
Governing Council meeting.
The marginal lending facility rate was kept unchanged at 0.25
percent.
The bank also retained its forward guidance on both interest
rates and asset purchases.
"The Governing Council expects the key ECB interest rates to
remain at their present or lower levels until it has seen the
inflation outlook robustly converge to a level sufficiently close
to, but below, 2 percent within its projection horizon, and such
convergence has been consistently reflected in underlying inflation
dynamics," the bank said.
The ECB said it would restart its asset purchase programme at a
monthly pace of EUR 20 billion from November 1.
Soft manufacturing PMIs from Germany and Eurozone triggered a
pull back in the euro earlier in the European session.
Survey data from IHS Markit showed that the euro area private
sector remained close to stagnation in October as manufacturing
continued to shrink amid subdued expansion in services
activity.
The flash composite output index rose slightly to 50.2 in
October from 50.1 in September. A score above 50 indicates
expansion, and that below 50 suggests contraction. The score was
forecast to improve to 50.3.
The currency held steady against its major counterparts in the
Asian session.
The euro slipped to 1.1120 against the greenback, down from a
3-day high of 1.1163 hit at 3:15 am ET. The euro is seen finding
support around the 1.09 region.
After rising to a 3-day high of 121.39 at 3:15 am ET, the euro
pulled back to 120.80 against the yen. The next likely support for
the euro is seen around the 118.00 level.
Final data from the Cabinet Office showed that Japan's leading
index fell less than estimated in August but remained at the lowest
level in nearly ten years in August.
The leading index, which measures the future economic activity,
fell to 91.9 in August from 93.7 in July. The initial estimate was
91.7.
The single currency depreciated to 1.1016 versus the Swiss
franc, following a 1-week high of 1.1042 seen at 3:15 am ET. The
euro is poised to challenge support around the 1.09 level.
Reversing from an early 2-day high of 1.4590 against the loonie,
euro fell back to 1.4542. On the downside, 1.42 is possibly seen as
the next support level for the euro.
The euro eased off to 1.6268 against the aussie, from a weekly
high of 1.6310 it touched at 3:15 am ET. Should the euro falls
further, it is likely to test support around the 1.61 region.
Survey data from IHS Markit showed that Australia's private
sector logged a weaker growth in October.
The Commonwealth Bank of Australia Flash Composite Output Index
dropped to 50.7 in October from 52.0 in September. A score above 50
indicates expansion.
In contrast, the euro held steady against the kiwi, after having
risen to a 3-day high of 1.7434 at 3:15 am ET. The pair had
finished Wednesday's deals at 1.7333.
After rebounding from a 2-day low of 0.8600 seen at 3:00 am ET,
the euro traded steadily against the pound in subsequent deals. The
pair was valued at 0.8615 when it ended trading on Wednesday.
Looking ahead, the U.S. new home sales for September will be
featured at 10:00 am ET.
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