Euro Advances As ECB Draghi Lifts Inflation, Growth Forecasts
December 14 2017 - 5:04AM
RTTF2
The euro climbed against its key counterparts in the European
session on Thursday, after the European Central Bank President
Mario Draghi lifted the inflation and growth forecasts for the euro
area citing higher oil and food prices.
In his customary press conference, Draghi acknowledged that
strong cyclical momentum and the significant reduction of economic
slack give greater confidence that inflation would converge towards
the ECB's inflation aim.
The ECB is ready to provide continued monetary support by the
additional net asset purchases that had been decided at the October
monetary policy meeting, by the sizeable stock of acquired assets
and the forthcoming reinvestments, and by bank's forward guidance
on interest rates, he said.
The ECB retained inflation forecast for this year at 1.5
percent. For 2018, the inflation is seen at 1.4 percent, up from
its prior forecasts of 1.2 percent.
At its monetary policy meeting, the Governing Council left the
interest rates on the main refinancing operations, the marginal
lending facility and the deposit facility unchanged at 0.00
percent, 0.25 percent and -0.40 percent, respectively.
Flash survey data from IHS Markit showed that Eurozone private
sector activity expanded at the fastest pace in nearly seven years
in December.
The headline composite output index climbed to an 82-month high
of 58.0 in December from 57.5 in November. Meanwhile, the index was
expected to fall to 57.2.
The single currency continued to be higher against the
greenback, touching a 9-day high of 1.1863. The pair closed
Wednesday's deals at 1.1826. The euro is seen finding resistance
around the 1.20 region.
The euro that closed Wednesday's trading at 133.07 against the
Japanese yen climbed to a 2-day high of 133.76. If the euro extends
rise, 136.00 is likely seen as its next resistance level.
Data from the Ministry of Economy, Trade and Industry showed
that Japan's industrial production rebounded as initially estimated
in October.
Industrial production rose a seasonally adjusted 0.5 percent
month-over-month in October, reversing a 1.0 percent decline in
September. That was in line with the flash data published on
November 29.
Following a 3-day low of 0.8780 hit against the pound at 4:30 am
ET, the euro reversed direction and climbed to 0.8833. The pair
closed Wednesday's trading at 0.8813. The currency is poised to
target resistance around the 0.90 mark.
Figures from the Office for National Statistics showed that
retail sales volume climbed 1.1 percent on a monthly basis in
November, with strong contribution from households goods stores.
This was the biggest increase since April, when sales advanced 1.9
percent.
Sales were forecast to grow marginally by 0.4 percent after
expanding 0.5 percent in October.
The euro resumed its early rally against the Swiss franc,
hitting a 6-day high of 1.1705. The euro ended Wednesday's trading
at 1.1653 against the Swiss franc. Further uptrend may take the
euro to a resistance around the 1.18 level.
The Swiss National Bank maintained its expansionary monetary
policy stance, saying it will remain active in the foreign exchange
market as necessary although the currency weakened against the euro
and the US dollar.
The interest rate on sight deposits at the SNB was retained at
-0.75 percent and the target range for the three-month Libor was
kept unchanged between -1.25 percent and -0.25 percent, the bank
said in a statement.
The 19-nation currency spiked up to 1.5227 against the loonie,
its highest since December 1. The euro-loonie pair was worth 1.5153
at Wednesday's close. Next key resistance for the euro is seen
around the 1.54 mark.
The euro appreciated to a 2-day high of 1.6966 against the kiwi,
compared to 1.6836 hit late New York Wednesday. The euro is likely
to target resistance around the 1.72 mark.
The euro briefly recovered to 1.5484 against the aussie, from
more than a 4-week low of 1.5416 set in early European session.
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