Euro Slides After ECB Draghi's Warning Over Protectionism
08 March 2018 - 9:37PM
RTTF2
The euro weakened against its major counterparts in the European
session on Thursday, as the European Central Bank President Mario
Draghi expressed concerns over protectionism, saying that a trade
war poses downside risk to the outlook.
In his customary press conference, Draghi said that an "increase
in protectionism" and other global factors, such as the
euro-exchange-rate trends, could pose risks to the euro area's
growth.
"If you put tariffs against what are your allies, one wonders
who the enemies are," Draghi remarked.
Meanwhile, Draghi asserted that Eurozone economic growth is
projected to expand at a somewhat faster pace than previously
expected in the near term.
The outlook for growth "confirms our confidence that inflation
will converge towards our inflation aim of below, but close to, 2%
over the medium term," he reiterated.
The ECB revised up its growth forecasts to 2.4 percent this
year, from its previous forecast of 2.3 percent. For 2019 and 2020,
it still expects growth to be 1.9 percent and 1.7 percent,
respectively.
The ECB kept its main refi rate is currently at a record low
zero percent and the deposit rate at -0.40 percent. The marginal
lending facility rate is 0.25 percent.
The bank changed its forward guidance, omitting the mention of
its stance that it will boost the asset purchases, should outlook
worsens.
In economic news, figures from Destatis showed that Germany's
factory orders declined more than expected in January.
New orders in manufacturing dropped 3.9 percent month-on-month
in January, reversing a revised 3 percent rise in December. Orders
were forecast fall moderately by 1.8 percent.
The currency fell against its major counterparts in the Asian
session.
The euro dropped to a 2-day low of 1.2363 against the greenback,
from an early near a 3-week high of 1.2446. The euro is poised to
target support around the 1.22 mark.
The euro reversed from an early 1-1/2-month high of 1.1741
against the franc, easing to 1.1702. The euro may challenge support
around the 1.16 mark.
Pulling away from an early 2-day high of 131.98 against the yen,
the euro weakened to 131.03. The next possible support for the euro
is seen around the 128.00 mark.
Data from the Cabinet Office showed that Japan's gross domestic
product rose a seasonally adjusted 0.4 percent on quarter in the
fourth quarter of 2017.
That exceeded expectations for an increase of 0.2 percent after
last month's preliminary reading suggested a gain of 0.1
percent.
The 19-nation currency weakened to a 2-day low of 0.8907 against
the pound, from an early high of 0.8957. Next likely support for
the euro is seen around the 0.88 level.
Survey data from the Royal Institution of Chartered Surveyors
showed that UK house prices stabilized in February and property
coming to the market for sale declined.
The net house price balance fell to zero in February.
The euro eased back to 1.7009 against the kiwi, from an early
near 3-month high of 1.7131. If the euro falls further, 1.68 is
seen as its next support level.
The euro hit a 3-day low of 1.5933 against the loonie, off its
early high of 1.6067. On the downside, 1.55 is seen as the next
support level for the euro.
The single currency fell back to 1.5835 against the aussie, from
an early high of 1.5941. This may be compared to a 2-day low of
1.5831 hit at 9:30 pm ET. The euro is seen finding support around
the 1.57 mark.
Looking ahead, at 11:00 am ET, the Bank of Canada Governor
Stephen Poloz speaks at the unveil of the new $10 bank note, in
Halifax.
At 3:35 pm ET, the BOC Deputy Governor Timothy Lane speaks about
the March interest rate decision at the Vancouver Board of
Trade.
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