News Column

Euro Steady Ahead Of ECB Decision

September 4, 2014

BRUSSELS (Alliance News) - The euro held steady against its major rivals in European deals on Thursday, as traders await the European Central Bank's announcement on monetary policy, due today.

The bank is widely expected to keep key rates unchanged, with deposit rate at -0.1% and refinancing rate at 0.15%.

Meanwhile, few analysts forecast a cut in main rate to 0.05%, a record low, in order to make the central bank lending program more attractive to commercial banks.

Traders await the ECB President Mario Draghi's press conference, due at 8:30 am ET, to ascertain whether the bank is closer to launch quantitative easing program.

The euro strengthened modestly in early deals, after data showing surge in German factory orders in July.

Germany's manufacturing orders rebounded strongly in July, far exceeding economists' expectations, figures from the Federal Statistical Office showed.

Factory orders increased a seasonally adjusted 4.6% from June, when they fell 2.7%, revised from a 3.2% decline. Economists had expected a 1.5% gain for July.

The euro edged up to 1.2073 against the franc and 0.7992 against the pound and moved sideways thereafter. The next possible resistance for the euro lies around 1.215 against the franc and 0.805 against the pound.

Bouncing off from an early low of 137.68 against the yen, the euro advanced to 138.00, and held steady thereafter. Next key resistance for the euro is seen around the 138.5 region.

The Bank of Japan, or BoJ, kept its monetary policy unchanged at its September meeting, the central bank announced today in a statement following the conclusion of its 2-day monetary policy meeting.

The Bank also announced its decision to retain its policy of expanding monetary base at an annual rate of 60-70 trillion yen.

The euro rose back to 1.3153 against the greenback earlier and traded steadily in later part of the deals. If the euro continues its uptrend, it is likely to test resistance around the 1.32 area.

Looking ahead, the Bank of England will announce its interest rate decision at 7:00 am ET. The rates are expected to be held at 0.50% and asset purchase target at GBP 375 billion.

The US ADP employment data for August, weekly jobless claims for the week ended August 30, trade data for July and ISM non-manufacturing composite index for August, as well as Canada trade data for July are due in the New York session.

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Source: Alliance News

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