Euro Advances As Keeps Rates Unchanged, Indicates Rate Hike Delay
June 06 2019 - 3:37AM
RTTF2
The euro spiked higher against its major counterparts in the
European session on Thursday, after the European Central Bank
maintained its key rates at their record low and revised its
forward guidance indicating that its key rates would remain on hold
at least through the first half of 2020.
The Governing Council, led by ECB President Mario Draghi, left
the key interest rates unchanged after the policy session in the
Lithuanian capital of Vilnius, as expected.
The 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 at 0.25 percent.
The bank changed its forward guidance to reflect that it expects
any change to the interest rate only after the first half of next
year. Earlier, the bank expected rates to remain unchanged at least
through the end of this year.
"The Governing Council now expects the key ECB interest rates to
remain at their present levels at least through the first half of
2020, and in any case for as long as necessary to ensure the
continued sustained convergence of inflation to levels that are
below, but close to, 2 percent over the medium term," the bank
said.
Data from Eurostat showed that the euro area economy expanded as
initially estimated in the second quarter, mainly driven by
household spending and investment.
Gross domestic product grew 0.4 percent sequentially, in line
with the previous estimate and bigger than the 0.2 percent growth
seen in the fourth quarter of 2018.
The currency traded mixed against its major counterparts in the
Asian session. While it rose against the greenback and the pound,
it held steady against the franc. Against the yen, it dropped.
The euro appreciated to 1.1272 against the greenback, from a
3-day low of 1.1201 touched immediately after the ECB decision. If
the euro rallies further, 1.14 is likely seen as its next
resistance level.
Following a 3-day low of 121.22 hit soon after the ECB
announcement, the euro recovered to 121.95 against the Japanese
yen. The euro is seen finding resistance around the 124.00
region.
The euro bounced off to 0.8858 against the pound, from a 3-day
low of 0.8828 hit in the immediate aftermath of announcement. The
next possible resistance for the euro is seen around the 0.90
level.
The European currency was trading higher at 1.1175 against the
franc, up from a low of 1.1155 seen at 2:30 am ET. The euro is
likely to test resistance around the 1.13 level.
The euro advanced to 1.5107 against the loonie, 1.6143 against
the aussie and 1.6997 against the kiwi, after falling to a 6-day
low of 1.5027, 3-day low of 1.6072 and more than a 4-week low of
1.6911, respectively post-ECB decision. The euro is poised to test
resistance around 1.53 against the loonie, 1.63 against the aussie
and 1.72 against the kiwi.
Looking ahead, U.S. and Canadian trade data for April, weekly
jobless claims for the week ended June 1 and Canada Ivey PMI for
May are scheduled to be released in the New York session.
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