Euro Muted After ECB Decision
December 12 2019 - 3:29AM
RTTF2
The euro showed muted trading against its major counterparts in
the European session on Thursday, after the European Central Bank
left its key interest rates, asset purchases and forward guidance
unchanged amid sluggish growth and low inflation.
The Governing Council decided to hold the refi rate unchanged at
a record low 0 percent, the deposit rate at -0.50 percent and the
marginal lending rate at 0.25 percent. The move was in line with
economists' expectations.
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.
Lagarde is set to make her first post-decision press conference
at 8.30 am ET.
Data from Eurostat showed that Eurozone industrial production
decreased for the second straight month, largely driven by weak
capital goods output in October.
Industrial output dropped 0.5 percent in October from September,
when production was down 0.1 percent. This was the second straight
decline and the biggest fall since June.
The euro rose against its major counterparts in the previous
session, except the pound.
The euro held steady against the greenback, after having
retreated to 1.1125 at 4:45 am ET. This came after a high of 1.1144
hit at 9:45 pm ET. The pair had closed yesterday's deals at
1.1129.
The euro reversed from an early 5-week high of 121.04 versus
yen, pulling back to 120.87. The currency is likely to face support
around the 118.00 region, if it falls again.
Data from the Cabinet Office showed that Japan core machine
orders fell a seasonally adjusted 6.0 percent on month in October -
coming in at 798.8 billion yen.
That missed forecasts for an increase of 0.7 percent following
the 2.9 percent decline in September.
After an early uptick to a 3-day high of 1.0948 against the
franc, the euro retreated to 1.0924 and held steady thereafter. At
yesterday's close, the pair was valued at 1.0937.
Switzerland's central bank maintained its negative interest
rates and expressed willingness to intervene in the currency market
as required.
The Swiss National Bank retained its policy rate and interest on
sight deposits at the SNB at -0.75 percent. The decision came in
line with expectations.
The euro appreciated to a 6-day high of 0.8463 against the
pound, from an early low of 0.8420, and held steady thereafter. The
pair was worth 0.8434 at Wednesday's close.
Survey data from the Royal Institution of Chartered Surveyors
showed that UK house prices declined at the fastest pace since
April as uncertainties from Brexit and general election weighed on
the property market.
The house price balance fell to -12 in November from -5 in
October.
Looking ahead, Canada new housing price index for October, U.S.
producer price index for November and weekly jobless claims for the
week ended December 7 are due in the New York session.
Bank of Canada Governor Stephen Poloz will give a speech about
Canada's economic outlook for 2020 at the Empire Club of Canada in
Toronto at 12:30 pm ET.
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