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Forex News: Euro Climbs As ECB Minutes Show Discussion To

Euro Climbs As ECB Minutes Show Discussion To Abandon Pledge To Boost QE

07/06/2017 - 09:17:00 (RTTNews)

(RTTNews) - The euro strengthened against its major counterparts in the European session on Thursday, as the minutes of the European Central Bank's June meeting showed that the policymakers discussed to remove its pledge to accelerate the bank's bond-purchase programme but decided to retain monetary policy stance on weak inflation.

The Governing Council assessed that it was important to stress the stronger and broader momentum of the recovery in the euro area economy, while emphasizing that the risks to the growth outlook had broadly balanced.

With the improved growth environment diminishing the likelihood of deflation risks in the euro area, the Governing Council had removed the reference to the expectation of further rate cuts in its forward guidance on policy rates, the minutes of the June 7-8 meeting showed.

Although there were valid reasons to retain the APP easing bias in the present scenario, continued economic expansion and improved inflation outlook would necessitate the need to review the retainment of the bias, the minutes noted.

Data from Destatis showed that Germany's factory orders recovered on foreign demand in May.

Factory orders grew 1 percent month-on-month in May, reversing a revised 2.2 percent fall in the previous month. However, the pace of growth was weaker than the expected 1.9 percent.

The euro dropped against its most major counterparts in the Asian session, as mixed signals from the Federal Reserve sapped investors' appetite for risk.

The single currency appreciated to 0.8790 against the pound, from more than a 2-week low of 0.8756 hit at 5:45 am ET. The euro is seen finding resistance around the 0.89 region.

The euro advanced to a 3-day high of 1.1398 against the greenback, compared to 1.1351 hit late New York Wednesday. The next possible resistance for the euro-greenback pair is seen around the 1.16 area.

Data from the payroll processor ADP showed that U.S. private sector employment rose less than expected in the month of June.

ADP said private sector employment climbed by 158,000 jobs in June after jumping by a revised 230,000 jobs in May.

Extending its early gains, the euro hit 1.0983 against the franc, which was its highest since May 12. If the euro extends rally, 1.12 is possibly seen as its next resistance level.

Data from the Federal Statistical Office showed that Switzerland's inflation eased more than expected in June.

Consumer prices climbed only 0.2 percent year-on-year in June, following the 0.5 percent increase seen in May.

Bouncing off from an early 3-day low of 128.00 against the yen, the euro strengthened to 129.05. Further gains may take the euro to a resistance around the 131.00 mark.

The euro firmed to new 4-week highs of 1.5013 against the aussie and 1.5714 against the kiwi, off its early lows of 1.4903 and 1.5556, respectively. On the upside, 1.51 and 1.59 are likely seen as the next resistance levels for the euro against the aussie and the kiwi, respectively.

The common currency reversed from an early low of 1.4674 against the loonie, advancing to 1.4729. Next likely resistance for the euro is seen around the 1.49 area.

Looking ahead, ISM non-manufacturing composite index for June is due shortly.

At 10:00 am ET, the Fed Reserve Governor Jerome Powell gives a speech titled "The Case for Housing Finance Reform" at the American Enterprise Institute, in Washington DC.

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