Euro Dips After Soft Services PMI Data; Focus On ECB Decision
04 March 2015 - 10:06PM
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The euro came under pressure in early European deals on
Thursday, as service sector activities across the euro region
slowed more than initially estimated in February. Traders focus on
the European Central Bank's 2-day meeting starting today for more
details about the execution of quantitative easing program, which
begins this month.
The ECB policy setting meeting in Cyprus and President Mario
Draghi's press conference will be closely watched for additional
features of €60 billion-per-month asset purchase program that was
unveiled in January. Till now, the ECB has only said that the
government bond purchases will start sometime this month, and run
through at least September 2016.
The ECB officials have previously told that they would buy
government bonds in line with the central bank's capital key.
The bank is unlikely to unveil new policy measures, retaining
main refinancing rate unchanged at 0.05 percent.
The Eurozone private sector expanded at a slower than initially
estimated pace in February, survey data from Markit Economics
showed.
Although the services Purchasing Managers' Index rose to a
7-month high of 53.7 in February, it was below 53.9 estimated on
February 20.
The composite output index rose to 53.3 in February, compared to
flash score of 53.5.
Separate data showed that Germany's final services activity rose
to a 5-month high of 54.7 in February, slower than the flash score
of 55.5. The composite PMI also came in weaker-than-expected at
53.8 in February.
Italy's service sector activity stagnated unexpectedly in
February after expanding in the previous month, another data from
Markit Economics showed.
The headline Markit/ADACI services Purchasing Managers' Index
decreased to 50 in February from 51.2 in January. Economist had
forecast the index to increase to 51.4.
In Spain, the headline services purchasing managers' index edged
down to 56.2 in February from 56.7 in January, less than the
consensus estimate of 56.6.
The euro depreciated to 132.92 against the Japanese yen for the
first time since February 5. The euro is likely to find support
around against the 132.00 zone.
The euro hit 1.1114 against the U.S. dollar, its lowest since
January 26, when it hit more than 11-year low. Continuation of
downtrend may drive the euro down to a support around the 1.10
mark.
The euro gave back early gains against the franc, trading at
1.0702. The next key support for the euro-franc is possibly found
near the level.
The single currency fell to more than 7-year low of 0.7235
against the Sterling at 4:10 am ET, before recovering a bit in a
short while. At yesterday's close, the pair was worth 0.7268.
The U.K. service sector expansion slowed unexpectedly in
February, survey data from Markit showed.
The Markit/Chartered Institute of Purchasing and Supply
Purchasing Managers' Index for the service sector decreased to 56.7
in February from 57.2 in January. The score was forecast to rise to
57.5.
The 19-nation currency drifted lower to a record low of 1.4662
against the NZ dollar, down from Tuesday's closing value of 1.4797.
Against the aussie, the euro slipped to a 5-week low of 1.4197. On
the downside, 1.41 is seen as the euro's next support level against
the aussie.
The euro eased to 1.3909 against the Canadian dollar, from an
early high of 1.3976. The euro may locate downside target around
the 1.38 area.
Looking ahead, Markit's U.S. PMI, ISM U.S. non-manufacturing PMI
and private sector employment report - all for February are slated
for release in the New York session.
At 9:00 am ET, U.S. Federal Reserve Bank of Chicago President
Charles Evans will deliver a speech about the economic outlook and
monetary policy at the Lake Forest-Lake Bluff Rotary Club 2015
Economic Breakfast in Lake Forest.
Around 45 minutes later, Bank of England's Deputy Governor
Andrew Bailey is expected to speak on currency at Treasury
Committee Hearing, U.K.
The Bank of Canada will announce its interest rate decision at
10:00 am ET. Economists expect the bank to retain interest rates
unchanged at 0.75 percent.
At 2:00 pm ET, U.S. Federal Reserve releases Beige Book
report.
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