Euro Declines After ECB Draghi Dismisses Pickup In Inflation
19 January 2017 - 9:12PM
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The euro slipped against its major opponents in early New York
deals on Thursday, after the European Central Bank President Mario
Draghi remarked that there are no indications of sustainable
inflation as of yet as the recent pickup in headline inflation is
primarily being driven by higher energy prices.
"There are no signs yet of a convincing upward trend in
underlying inflation," Draghi told at post-decision press
conference in Frankfurt.
"Headline inflation is likely to pick up further in the near
term, largely reflecting movements in the annual rate of change of
energy prices. However, measures of underlying inflation are
expected to rise more gradually over the medium term," he
added.
Draghi noted that utmost substantial degree of monetary
accommodation is needed for euro-area pressures to build up and to
support headline inflation in medium-term.
The 25-member Governing Council kept its main refinancing rate
at zero, and the deposit rate at minus 0.4 percent at its policy
session in Frankfurt. The marginal lending facility rate was held
at 0.25 percent.
The bank also retained its asset purchases of EUR 80 billion a
month till March and to continue them at a reduced size of EUR 60
billion a month till December 2017.
In other economic news, data from the European Central Bank
showed that the euro area current account surplus reached a record
high level in November.
The seasonally adjusted current account surplus rose to EUR 36.1
billion in November from EUR 28.3 billion in October.
The euro has been trading in a negative territory in the
European session, with the exception of the Japanese yen.
The euro depreciated to 0.8618 against the pound, its lowest
since January 9. Continuation of the euro's downtrend may see it
challenging support around the 0.84 level.
The euro weakened to a 2-day low of 1.0601 against the
greenback, reversing from a high of 1.0677 hit at 8:00 am ET. The
euro is poised to find support around the 1.04 mark.
Data released by the Labor Department showed that first-time
claims for U.S. unemployment benefits unexpectedly declined in the
week ended January 14th.
The report said initial jobless claims fell to 234,000, a
decrease of 15,000 from the previous week's revised level of
249,000.
Following an 8-day high of 122.45 hit at 8:30 am ET versus the
yen, the euro retreated to 121.84 in a short while. The next
possible downside target for the euro-yen pair may be found around
the 120.00 zone.
The euro reversed from an early high of 1.0731 against the Swiss
franc, easing back to 1.0707. The currency is heading to pierce its
early 2-week low of 1.0698. Further downtrend may take the euro to
a support around the 1.06 area.
Data from the the Federal Statistical Office showed that
Switzerland's producer and import prices remained unchanged at the
end of the year.
Producer and import prices held steady on a yearly basis in
December, confounding expectations for an increase of 0.1
percent.
The 19-nation currency slid to a 1-1/2-year low of 1.4028 versus
the aussie and a near a 5-week low of 1.4772 against the kiwi, off
its early high of 1.4178 and a multi-day high of
1.4927,respectively. The next possible support levels for the euro
are seen around 1.45 against the kiwi and 1.39 against the
aussie.
Pulling away from nearly 3-week high of 1.4189 against the
loonie, the euro eased back to 1.4073. On the downside, 1.39 is
likely seen as the next support level for the euro-loonie pair.
Looking ahead, U.S. crude oil inventories data is due
shortly.
At 3:45 pm ET, San Francisco Fed President John Williams is
expected to speak before the Solano Economic Development
Corporation Annual Luncheon Meeting, Fairfield, United States.
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