Euro Mixed After ECB Decision

Euro Mixed After ECB Decision

The euro came in mixed against its key counterparts in the European session on Thursday, after the European Central Bank left its key interest rates and massive stimulus unchanged, as expected.

The Governing Council, led by ECB President Mario Draghi, kept all its three interest rates unchanged for a twelfth consecutive policy session.

The main refi rate was held at a record low zero percent and the deposit rate at -0.40 percent. The marginal lending facility rate was kept at 0.25 percent.

“The Governing Council expects the key ECB interest rates to remain at their present levels for an extended period of time, and well past the horizon of the net asset purchases,” the ECB said in a statement.

The bank also retained its monthly asset purchases of EUR 60 billion that are set to run till December 2017. The size was reduced in March from EUR 80 billion.

Draghi is scheduled to hold his customary post-decision press conference at 8.30 am ET, with investors awaiting more clues on timing of scaling back the bond purchase program. Draghi will also unveil the latest ECB Staff economic projections during the press conference. Economists widely expect a further upgrade to the growth outlook but yet another trimming of the inflation projections.

Data from Eurostat showed that the euro area economy expanded at a slightly faster pace in the second quarter.

Gross domestic product grew 0.6 percent sequentially in the second quarter, faster than the 0.5 percent expansion seen in the first quarter. The rate came in line with the estimate released on August 16. The currency showed mixed performance in the Asian session. While the euro held steady against the greenback and the pound, it rose against the Swiss franc. Against the yen, the euro fell.

The single currency retreated to 0.9140 against the pound, following a 2-day high of 0.9170 hit at 5:30 am ET. The euro is likely to find support around the 0.90 zone.

Data from the mortgage lender Halifax and IHS Markit showed that UK house prices increased at a faster pace in August.

House prices advanced 2.6 percent year-on-year in three months to August, faster than the 2.1 percent increase seen in three months to July. The annual growth was forecast to stagnate at 2.1 percent.

The euro held steady against the greenback, after having advanced to a 9-day high of 1.1994 at 6:45 am ET. The euro was worth 1.1917 per greenback when it closed deals on Wednesday.

Following a 2-day high of 130.58 hit at 6:45 am ET, the euro was steady against the Japanese yen in subsequent part of deals. The pair closed yesterday's trading at 130.09.

Survey data from the Cabinet Office showed that Japan's leading index declined more than expected in July.

The leading index, which measures the future economic activity, fell more-than-expected to 105.0 in July from 105.7 in June. The reading was forecast to fall to 105.1.

The 19-nation currency that hit a 6-day high of 1.1435 against the Swiss franc early in the Asian session wobbled in the course of the trading session. The euro-franc pair was valued at 1.1393 at yesterday's close.

Looking ahead, U.S. weekly jobless claims for the week ended for September 2, Canada building permits for July, Canada Ivey PMI for August, and U.S. crude oil inventory data are slated for release in the New York session.

SOURCE

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