Euro Extends Decline On ECB Stimulus; Greek Elections Weigh
23 January 2015 - 9:53PM
RTTF2
The euro continued its early fall against its major rivals in
European morning deals on Friday, in reaction to the European
Central Bank's decision to launch €60 billion a month bond buying
program, and on concerns ahead of the Greek elections on
Sunday.
Greece goes to polls on Sunday after the Parliament failed in
late December to agree on a new head of state. According to opinion
polls, anti-austerity party Syriza, or the Coalition of the Radical
Left, is heading for a comfortable victory. There are fears that
hard-left Syriza coalition may renegotiate a chunk of Greek debt
and end austerity measures if it is voted into power.
The ECB president Mario Draghi said on Thursday that the bank
will buy assets, including government debt, asset-backed securities
and covered bonds, for a total of €60 billion a month.
The scheme would commence in March and last until the end of
September 2016, or "until we see a sustained adjustment in the path
of inflation," Draghi told.
Quantitative easing program tends to debase the economy's
exchange rate. The euro nose-dived after the announcement.
Meanwhile, Eurozone private sector grew at the fastest pace in
five months in January, flash survey data from Markit Economics
showed.
The composite output index rose more-than-expected to a
five-month high of 52.2 in January from 51.4 in December.
Economists has forecast it to rise to 51.7 nominally. The single
currency fell to 1.1219 against the U.S. dollar for the first time
since August 2003. This is down by around 1.3 percent from
yesterday's closing value of 1.1364. Continuation of the euro's
bearish trend may lead it to a support around the 1.10 zone.
The euro dropped to a 1-week low of 0.9839 against the Swiss
franc and a 7-year low of 0.7497 against the Sterling, down from
Thursday's closing values of 0.9885 and 0.7570, respectively. The
next possible downside target levels for the euro may be located
around 0.96 against the franc and 0.74 against the Sterling.
The common currency hit 133.00 against the Japanese yen, its
lowest since November 2013. The pair was valued at 134.64 at
Thursday's close. If the euro extends slide, 131.00 is likely seen
as its next support level.
The manufacturing sector in Japan continued to expand at an
accelerated pace in January, the latest flash purchasing managers'
index from Markit Economics and the Japan Materials Management
Association revealed.
The Markit/JMMA manufacturing purchasing managers' index, or
PMI, edged up to 52.1 in January from 52 in December.
Extending early slide, the euro slipped to a 3-day low of 1.3920
against the Canadian dollar. The euro-loonie pair ended yesterday's
deals at 1.4069. Next key support for the euro is seen around the
1.375 mark.
The 19-nation currency, which ended Thursday's deals at 1.5143
against the NZ dollar, slipped to a 3-day low of 1.5000. The next
likely downside target for the euro-kiwi pair could be found near
the 1.48 area.
The euro eased to 1.4102 against the aussie, after having
advanced to 1.4212 at 2:45 am ET. The euro may test support near
the 1.40 region.
Looking ahead, U.S. existing home sales and leading indicators
for December and Markit's manufacturing PMI for January, as well as
Canada CPI for December and retail sales for November are set for
release in the New York session.
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