Euro Down As Eurozone PPI Falls To More Than 5-year Low; ECB Meeting Awaited
03 March 2015 - 10:32PM
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The euro fell against its major rivals in early European deals
on Tuesday, as Eurozone producer price inflation fell
more-than-expected to lowest since November 2009 in January, and
traders look forward to the European Central Bank's monetary policy
meeting for more details about the quantitative easing program.
The ECB meeting, taking place in Cyprus, is likely to disclose
exactly when the bank intend to launch its private and public asset
purchases, which are due to start in March. In its January meeting,
the ECB chief Mario Draghi announced 60 billion euros per month QE
program to counter deflation plaguing the euro area.
At its 2-day meeting ending on Thursday, the bank is unlikely to
announce new policy measures, retaining main refinancing rate
unchanged at 0.05 percent.
Eurozone producer prices declined the most since November 2009
on falling energy prices, according to data from Eurostat.
Producer prices fell more-than-expected 3.4 percent on a yearly
basis in January, following a 2.6 percent drop in December. This
was the biggest fall since November 2009, when prices fell 4.4
percent. Economists had forecast a decline of 3 percent.
Excluding energy, producer prices declined only 0.7 percent from
last year, after falling 0.4 percent in the previous month.
The euro was higher on Monday, aided by falling Eurozone jobless
rate in January, slower than expected decline in consumer prices in
February and positive business activity reports from most parts
across the region.
The euro retreated to 1.1165 against the greenback, down from an
early high of 1.1211. The next possible support for the
euro-greenback pair is seen around the 1.10 zone.
Having advanced to 0.7286 against the pound at 2:45 am ET, the
euro edged down to 0.7263. If the single currency extends decline,
0.70 is likely seen as its next support level.
The U.K. construction sector expanded strongly in February as
new orders logged the steepest rise since October 2014, survey data
from Markit showed.
The Chartered Institute of Procurement & Supply/Markit
construction Purchasing Managers' Index rose to 60.1 in February
from 59.1 in January. It was forecast to fall to 59.
The euro that advanced to 134.43 against the yen at 6:45 pm ET
pared gains to 133.70. The euro is poised to challenge support
around the 131.5 mark.
The euro held steady against the franc, after easing a bit from
an early 5-day high of 1.0756. The pair was valued at 1.0713 at
yesterday's close.
Switzerland's economy grew more than expected in the fourth
quarter, data from the State Secretariat for Economic Affairs
revealed.
Gross domestic product advanced 0.6 percent from the third
quarter, when it was up by 0.7 percent.
Looking ahead, Canada GDP for fourth quarter and industrial
product price index for January are due to be released in the New
York session.
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