News Column

Euro Mixed Following ECB Decision

August 7, 2014

BRUSSELS (Alliance News) - The euro came in mixed against its major rivals in European deals on Thursday, after European Central Bank held its key interest rates steady for a second straight month.

The decision was in line with economists' expectations.

The Governing Council, led by President Mario Draghi, kept the refinancing rate at a record low 0.15%, following its policy meeting in Frankfurt. The bank maintained the deposit rate at -0.10%.

The marginal lending rate was retained at 0.40%, following the 35 basis point reduction in June.

The bank had kept rates unchanged for six consecutive months before June, despite the threat of deflation derailing the fragile economic recovery in the currency-bloc.

Draghi is set hold his customary post-decision press conference at 8.30 am ET.

In economic news, Germany's industrial production grew for the first time in four months in June, Destatis reported.

Industrial output increased 0.3% month-on-month in June, reversing the revised 1.7% fall in May. The June's rate of growth was slower than the expected 1.2% increase.

After advancing to a 2-day high of 1.3390 against the greenback at 9:45 pm ET, the euro eased to 1.3364 and stablised in a short while. The pair was valued at 1.3381 when it closed deals yesterday.

The euro held steady against the Swiss franc, after advancing to 1.2153 during European deals. At Wednesday's close, the pair was worth 1.2144. The next possible resistance for the euro-franc pair lies around the 1.22 area.

Sentiment among consumers in Switzerland weakened further in July, defying expectations for an improvement, data from the State Secretariat for Economic Affairs, or SECO, showed.

The consumer confidence fell to -1 in July from 1 in April. Economists had expected the index to rise to 3 in July.

The single currency eased back to 136.68 against the yen, after having advanced to 137.11 at 1:20 am ET. If the euro continues its slide, it may possibly challenge support around the region.

The euro showed a lackluster trading against the pound throughout European deals, following a 2-day high of 0.7947 hit at 1:45 am ET. The euro-pound pair was quoted at 0.7936 at Wednesday's close.

The Bank of England kept its interest rate unchanged at a historic-low and quantitative easing at GBP 375 billion as widely expected by economists.

At the two-day meeting, the nine-member Monetary Policy Committee governed by Mark Carney voted to maintain the key bank rate at 0.50%. The rate has been at the current 0.50% since March 2009.

Looking ahead, the US weekly jobless claims for the week ended August 2, Canada building permits for June and Ivey PMI for July are due shortly.

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Source: Alliance News

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