News Column

Euro Rises Against Most Majors Ahead Of ECB Decision

July 3, 2014

BRUSSELS (Alliance News) - The euro advanced against most major counterparts in European deals on Thursday, as traders await the European Central Bank's interest rate decision, due shortly.

The ECB is unlikely to introduce any new monetary measures at the meeting, after announcing a raft of stimulus measures in the June meeting. Analysts are looking for more details on targeted Long-Term Refinancing Operation conditions and potential asset backed securities purchase programs.

The decision will be followed by a press conference of ECB President Mario Draghi in Frankfurt at 8:30 am ET.

The strength of euro has been a challenge for the central bank, as it would affect inflation adversely. If the medium-term outlook for inflation worsens, Draghi said that it would conduct large-scale asset purchase program.

The euro area private sector growth eased for the second consecutive month in June as estimated to its lowest in the year so far, survey data from Markit Economics showed.

The final Markit composite output index fell to 52.8 in June from 53.5 in May. The score was unchanged from the flash estimate. Likewise, the services Purchasing Managers' Index dropped to 52.8, in line with flash reading, from 53.2 in May.

The figures from Eurostat showed that Eurozone retail sales remained unchanged from the previous month in May.

Retail sales were flat monthly, following a 0.2% decline in April, revised from a 0.4% gain reported earlier. Economists had forecast 0.3% sales growth for May.

The euro rallied to 139.27 against the yen, its strongest since June 10. At yesterday's close, the pair was worth 138.97. If the euro continues uptrend, it is likely to face resistance around the 140.00 zone.

The euro that ended yesterday's deals at 1.2139 against the Swiss franc rose to a 2-day high of 1.2146. The euro may possibly find resistance at the 1.22 zone.

After advancing to 0.7972 against the pound during early European deals, the euro held steady thereafter. Next key upside target for the euro is seen around the 0.806 region. The pair was quoted at 0.7955 at yesterday's close.

UK service sector activity continued to strengthen in June, albeit at a slower rate than expected, results of a survey by Markit Economics and the Chartered Institute of Purchasing and Supply showed.

The CIPS/Markit services purchasing managers' index came in at 57.7 in June, indicating strong growth though the index marked a three-month low.

Meanwhile, the euro held steady against the US dollar after recovering to 1.3663, from an early low of 1.3644.

Looking ahead, the US jobs data for June, weekly jobless claims for the week ended June 28, trade data for May and ISM non-manufacturing composite index for June, as well as Canada trade data for May are to be released in the New York session.

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Source: Alliance News

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