Euro Retreats After ECB Holds Rates Steady, Trims Asset Purchases From April
08 December 2016 - 7:34PM
RTTF2
The euro trimmed its early gains against its major rivals in the
European session on Thursday, after the European Central Bank left
its key interest rates unchanged and retained its asset purchases
of EUR 80 billion a month till March, while tapering them to EUR 60
billion a month from April 2017.
The Governing Council, led by ECB President Mario Draghi, kept
the refi rate unchanged at a record low zero percent in the policy
session held in Frankfurt.
The deposit rate was held steady at -0.40 percent, and the
marginal lending facility rate at 0.25 percent. The rate decision
was in line with economists' expectation.
The bank also decided to continue its purchases under the asset
purchase programme, or APP, at the current monthly pace of EUR 80
billion until the end of March 2017.
From April 2017, the net asset purchases are set to be carried
out at a monthly pace of EUR 60 billion until the end of December
2017, or beyond, the bank said.
Draghi is set to begin his customary post-decision press
conference at 8.30 am ET, when he is set to face questions on the
scaling back of stimulus called 'tapering' and the 'no' vote in
Italy's referendum and the country's subsequent request for more
time to rescue the troubled Monte dei Paschi bank.
The currency showed mixed performance in the Asian session.
While the euro held steady against the franc and the pound, it rose
against the greenback. Against the yen, it declined.
The euro that appreciated to near a 4-week high of 1.0873
against the greenback immediately after the decision retreated to
1.0741 in a short while. At Wednesday's close, the pair was valued
at 1.0752. On the downside, 1.06 is possibly seen as the next
support level for the euro.
Pulling away from its recent 8-day high of 0.8571 against the
Sterling, the euro declined to 0.8478 shortly afterwards. The euro
is poised to locate support near the 0.84 area.
The Report on Jobs compiled by the Recruitment and Employment
Confederation and IHS Markit showed that U.K. permanent job
placements grew at the fastest pace in nine months in November.
The number of people placed in permanent jobs rose again in
November, with the rate of growth quickening to its sharpest since
February.
The single currency eased back to 1.0842 against the Swiss
franc, from near a 2-month high of 1.0898 set in the aftermath of
the announcement. Continuation of the euro's downtrend may see it
challenging support around the 1.07 region.
The 19-nation currency reversed from a new 4-week high of 1.4513
against the aussie, edging lower to 1.4372. The next possible
support for the euro-aussie pair is seen around the 1.42 mark.
The euro declined to a 3-day low of 1.4195 against the loonie,
after having advanced to 10-day high of 1.4354 soon after the ECB
decision. The euro is likely to challenge support near the 1.41
area.
Following a 2-day high of 1.5090 hit against the NZ dollar at
7:45 am ET, the euro retreated to 1.4945. The euro is seen finding
support around the 1.48 area.
On the flip side, the euro firmed to a 6-1/2-month high of
123.34 against the yen, up from a 2-day low of 121.99 hit at 10:30
pm ET. The next possible resistance for the euro-yen pair may be
located around the 126.00 mark.
Survey figures from the Cabinet Office showed that a measure of
peoples' assessment of the Japanese economy increased unexpectedly
in November to the strongest level in almost one year.
The current index of Economy Watchers' survey climbed to 48.6 in
November from 46.2 in the previous month. Meanwhile, economists had
expected the index to fall to 45.5.
Looking ahead, Canada building permits and house price index for
October and U.S. weekly jobless claims for the week ended December
3 are due to be released shortly.
Later in the day, Bank of Canada Governor Stephen Poloz, Canada
Minister of Finance Bill Morneau and Minister of Status of Women
Patty Hajdu are scheduled to attend an event in Gatineau, Quebec,
Canada.
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