Euro Advances After ECB Member Hints At Monetary Policy Shift
27 March 2017 - 8:42PM
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The euro strengthened against most major counterparts in the
European session on Monday, after the European Central Bank board
member Sabine Lautenschläger said that markets should brace for a
change in the central bank's policy, hinting at a withdrawal from
quantitative easing programme on attainment of sustainable price
stability goal.
Speaking to CNBC, Lautenschläger said that the current lose
monetary policy stance is appropriate in the light of incoming
economic data, although solid numbers through June could lead to a
discussion of the bank's policy measures.
"We should prepare for a change in the policy and as soon as the
data is stable and we have a sustainable path towards our objective
of price stability then we are well prepared to do," Lautenschläger
added.
The euro was underpinned by strong business climate index in
Germany, which added to the evidence that euro zone's biggest
economy is gaining momentum.
German business sentiment strengthened to a 68-month high in
March as economic impetus pushed up companies' assessment of the
current assessment and outlook.
The business confidence index rose to 112.3 in March from a
revised 111.1 in February, while economists had forecast the
indicator to fall to 110.8.
The euro showed mixed performance in the Asian session. While
the euro rose against the greenback and the pound, it held steady
against the franc. Against the yen, it dropped.
The single currency advanced to 1.0906 against the greenback,
its strongest since November 2016. The euro is poised to locate
resistance around the 1.10 region.
Bouncing off from an early low of 119.54 against the yen, the
euro edged up to 120.13. The euro is likely to find resistance
around the 122.00 mark.
The summary of opinions from the monetary policy meeting showed
that Bank of Japan board members viewed that the bank should not
rush to action and it should pursue monetary easing under the
current framework with patience.
To achieve the price stability target, it is important to bring
the economy onto a self-sustaining growth path, members said at the
meeting held on March 15 and 16.
The euro recovered to 0.8652 against the pound, from an early
low of 0.8625. The currency had already set a 5-day high of 0.8674
early in the Asian session. The next possible resistance for the
euro-pound pair is seen around the 0.90 level.
The Financial Policy Committee of the Bank of England said that
the Brexit and high household indebtedness are some of the main
risks to UK's financial stability.
At its March meeting, the committee judged that the overall
level of risks to the financial stability was broadly unchanged
since its last meeting in November but its assessment of the
relative weight on the various risks has shifted somewhat.
The euro firmed to a 2-1/2-month high of 1.4299 against the
aussie, 4-1/2-month high of 1.4569 against the loonie and a 2-week
high of 1.5444 against the kiwi, off its early lows of 1.4168,
1.4447 and 1.5372, respectively. Continuation of the euro's
downtrend may see it challenging resistance around 1.45 against the
aussie, 1.47 against the loonie and 1.565 against the kiwi.
On the flip side, the euro held steady at 1.0704 against the
Swiss franc, following a 5-day low of 1.0691 hit at 3:15 am ET.
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