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Forex News: Euro Advances As ECB Considers Revisiting Policy Communicati

Euro Advances As ECB Considers Revisiting Policy Communication Soon

01/11/2018 - 09:44:00 (RTTNews)

(RTTNews) - The euro firmed against its major opponents in the European session on Thursday, after minutes from the European Central Bank's December meeting showed growing confidence among members that inflation would converge further to the Governing Council's aim, while signaling a possible tweak in language pertaining to the monetary policy stance and forward guidance this year.

The financial conditions in the euro area had remained very favourable, mainly in light of improving macroeconomic prospects, the minutes from the December 13-14 showed.

The Governing Council's confidence in the convergence of inflation towards the goal had clearly strengthened since the past meeting, as economic growth indicators had continued to be better than expected and the new Eurosystem staff projections embodied a material improvement in the growth outlook, it showed.

"As progress was made towards a sustained adjustment in the path of inflation, the relative importance of forward guidance on rates in the Governing Council's policy package would increase," it said.

The members argued that further easing of financial conditions need not be warranted, as the stronger than expected expansion of the euro area economy bolstered confidence in the attainment of its inflation aim, the minutes added.

Data from Eurostat showed that Eurozone industrial production grew the most in three months in November.

Industrial output climbed 1 percent month-on-month, following October's 0.4 percent increase. This was the fastest growth since August and also exceeded the expected increase of 0.8 percent.

Data from Destatis showed that the German economy expanded at the fastest pace in six years in 2017.

Gross domestic product grew 2.2 percent in 2017 after expanding 1.9 percent in 2016. This was the fastest growth since 2011. The economy has grown for the eighth year in a row.

The currency showed mixed trading in the Asian session. While it rose against the yen and the franc, it fell against the greenback. Against the pound, it held steady.

The single currency reversed from an early 2-day low of 1.1685 against the franc, rising to 1.1735.The next possible resistance for the euro-franc pair is seen around the 1.20 region.

The 19-nation currency hit 0.8903 against the pound, its strongest since January 5. This may be compared to a low of 0.8843 hit at 5:00 pm ET. Continuation of the euro's uptrend may see it challenging resistance around the 0.90 mark.

The Credit Conditions Survey from the Bank of England showed that British lenders plan to reduce unsecured credit to households in the first quarter.

The availability of unsecured credit to households decreased in the fourth quarter. Lenders expect a considerable decrease in the first quarter.

Having fallen to more than a 3-week low of 133.02 against the yen at 5:30 pm ET, the euro reversed direction and rose to 134.18. If the euro rises further, 135.00 is possibly seen as its next resistance level.

Preliminary figures from the Cabinet Office showed that Japan's leading index increased notably in November to the strongest level in nearly four years.

The leading index, which measures the future economic activity, climbed to 108.6 in November from 106.5 in October. The figure also matched consensus estimate.

The euro strengthened to a 3-day high of 1.2025 against the greenback, from a low of 1.1930 hit at 2:30 am ET. On the upside, 1.22 is possibly seen as the next resistance for the euro.

Data from the Labor Department showed an unexpected increase in first-time claims for U.S. unemployment benefits for the second consecutive week.

The report said initial jobless claims rose to 261,000 in the week ended January 6th, an increase of 11,000 from the previous week's unrevised level of 250,000.

The euro climbed to 1.5293 against the aussie and 1.6667 against the kiwi, off its early 2-month low of 1.5155 and near a 3-month low of 1.6521, respectively. The euro is seen finding resistance around 1.54 against the aussie and 1.68 against the kiwi.

The euro appreciated to a weekly high of 1.5114 against the loonie, after having fallen to 1.4979 at 6:30 am ET. The euro is poised to target resistance around the 1.52 mark.

Looking ahead, U.S. monthly budget statement for December is due at 2:00 pm ET.

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