Euro Falls As ECB Minutes Show Persistent Uncertainties Weighing On Growth
April 04 2019 - 5:59AM
RTTF2
The euro weakened against its most major counterparts in the
European session on Thursday, as the minutes from the European
Central Bank's March meeting showed that policymakers agreed that
the weakening in economic data indicated a sizeable moderation in
the pace of the economic expansion that would extend into the
current year.
Policymakers cautioned about the continued slowdown in global
growth and trade momentum as well as the potential impact of trade
protectionism on the global outlook and the ongoing risk of an
escalation of trade conflicts, the minutes of the bank's March 6-7
meeting showed.
Members believed that the weakness in growth would be
longer-lasting than had previously been expected, with the result
that growth could slow below potential for a number of
quarters.
Policy makers also agreed that the weaker economic momentum in
the March staff projections implied a slower adjustment of
inflation to the ECB's price stability objective.
On the monetary analysis, however, policymakers expressed
concerns over the effects of persistently low rates that could
depress banks' interest margins and profitability with negative
effects on bank intermediation and financial stability in the
longer run, the minutes showed.
The currency has been already weighed by weak German factory
orders for February, which plunged to their lowest since January
2017.
Preliminary figures from the Federal Statistical Office showed
that Germany's manufacturing orders decreased sharply in February,
defying expectations for a modest increase.
Factory orders dropped 4.2 percent month-on-month, while
economists had forecast a 0.3 percent increase.
The currency showed mixed trading against its major counterparts
in the Asian session. While it held steady against the greenback
and the pound, it rose against the yen and the franc.
The euro declined to 1.1213 against the greenback, from a high
of 1.1248 hit at 1:45 am ET. The euro is seen finding support
around the 1.11 level.
Data from the Labor Department showed an unexpected decrease in
first-time claims for U.S. unemployment benefits in the week ended
March 30.
The report said initial jobless claims dipped to 202,000, a
decrease of 10,000 from the previous week's revised level of
212,000.
Having climbed to a 9-day high of 1.1224 against the franc at
3:45 am ET, the euro reversed direction and pulled back to 1.1205.
On the downside, 1.10 is possibly seen as the next support level
for the euro.
The euro fell to 124.97 against the yen, following a high of
125.39 seen at 8:45 pm ET. The next likely support for the euro is
seen around the 122.00 area.
The single currency eased to 1.4980 versus the loonie, from a
3-day high of 1.5016 touched at 2:15 am ET. If the euro continues
its fall, 1.47 is possibly seen as its next support level.
The euro retreated from an early high of 1.5811 against the
aussie with the pair trading at 1.5786. The euro is likely to find
support around the 1.56 level.
On the flip side, the euro appreciated to a session's high of
0.8558 against the pound, after falling to 0.8518 at 3:00 am ET.
Next key resistance for the euro is seen around the 0.87 level.
The euro climbed to a 2-day high of 1.6622 against the kiwi,
after having dropped to 1.6536 at 9:45 pm ET. The euro is poised to
find resistance around the 1.68 region.
Looking ahead, Canada Ivey PMI for March is slated for release
shortly.
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