Euro Declines On ECB Draghi's Dovish Remarks
October 21 2016 - 2:04AM
RTTF2
The euro slipped against its key counterparts in European
trading on Friday, as the European Central Bank President Mario
Draghi dismissed talks of an abrupt end to QE program and signaled
that policy makers are likely to extend their bond purchase program
beyond its scheduled expiration in March.
"We did not discuss tapering or the intended asset purchase
horizon," Draghi said in response to questions from reporters
during the post-decision press conference in Frankfurt. He added
that an abrupt end to its bond buying program is unlikely.
Draghi cautioned that extraordinary monetary support cannot last
forever, while noting that the authority's bond-buying program will
likely be tapered before it is halted.
Policymakers prefer to make a decision at the December 8
meeting, when ECB staff projections for growth and inflation
through 2019 will be released, he added.
Meanwhile, European markets are mixed, as traders digested
Draghi's remarks, and as Fed voting member William Dudley
reiterated that a rate hike is on the cards by the end of 2016.
The World Bank upped its crude oil price forecast for 2017 to
$55 a barrel from $53 a barrel, but warned that the rise of
non-traditional sources of supply will constrain OPEC's ability to
control prices.
The euro showed mixed trading in the previous session. While the
euro held steady against the Swiss franc and the pound, it dropped
against the greenback and the Japanese yen.
The euro declined to 3-week lows of 112.83 against the Japanese
yen and 1.0823 against the Swiss franc, from Thursday's closing
values of 113.60 and 1.0846, respectively. The next possible
support for the euro may be found around 110.00 against the yen and
1.06 against the franc.
The 19-nation currency lost 0.5 percent to hit 1.0878 against
the greenback, a level not seen since March 2016. On the downside,
1.07 is possibly seen as the next support level for the
euro-greenback pair. At Thursday's close, the pair was valued at
1.0929.
The single currency that ended Thursday's trading at 0.8917
against the pound dropped to a 2-week low of 0.8887. The euro-pound
pair is likely to find support around the 0.86 region.
Figures from the Office for National Statistics showed that U.K.
public sector net borrowing, excluding public sector banks,
increased unexpectedly in September.
The budget deficit rose by GBP 1.3 billion from prior year to
GBP 10.6 billion in September. Meanwhile, it was expected to narrow
to GBP 8.5 billion.
The euro edged down to 1.4229 against the aussie, 1.5172 against
the kiwi and 1.4411 against the loonie, compared to yesterday's
closing quotes of 1.4326, 1.5188 and 1.4457, respectively. Further
weakness may take the euro to support levels of around 1.40 against
the aussie, 1.50 against the kiwi and 1.43 against the loonie.
Looking ahead, Canada CPI for September and retail sales data
for August, Eurozone consumer sentiment index for October and U.S.
rig count data are set to be published in the New York session.
At 10:15 am ET, Federal Reserve Governor Daniel K. Tarullo is
scheduled to talk about "Pedagogy and Scholarship in a Post-Crisis
World" at the Columbia Law School Conference on the New Pedagogy of
Financial Regulation in New York.
At 2:30 pm ET, Federal Reserve Bank of San Francisco President
John Williams is expected to speak before the Federal Home Loan
Bank 2016 Member Conference, in San Francisco.
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