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Forex News: Euro Up As ECB Praet Says Signs Of

Euro Up As ECB Praet Says Signs Of Inflation Converging Towards Target Improved

06/06/2018 - 06:34:00 (RTTNews)

(RTTNews) - The euro gained ground against its major counterparts in the early European session on Wednesday, after the European Central Bank Executive Board member Peter Praet said that the Governing Council would decide next week regarding whether sufficient progress have been met to warrant a gradual wind down of net purchases.

Praet said that signals showing convergence of inflation towards the 2% target have improved and the Governing Council would discuss about a gradual unwinding of the net purchases next week.

"Signals showing the convergence of inflation towards our aim have been improving, and both the underlying strength in the euro area economy and the fact that such strength is increasingly affecting wage formation supports our confidence that inflation will reach a level of below, but close to, 2% over the medium term," Praet said at the Congress of Actuaries, in Berlin.

He said any decision concerning the termination or further extension of net purchases will hinge on the ultimate judgement of the Governing Council.

Praet noted that low interest rates fundamentally reflect the consequences of unfavorable secular trends, combined with the fall-out from the global financial crisis and euro area sovereign debt crisis.

Meanwhile, European stocks were broadly higher, with technology and commodity-related stocks leading the gainers.

The upside remained capped somewhat amid concerns that big spending plans and other changes proposed by the new coalition government in Italy will increase the country's debt burden.

The euro rose against its major counterparts in the Asian session, with the exception of the pound.

The euro advanced to a 9-day high of 1.1599 against the franc, 2-week highs of 1.1771 against the greenback and 129.58 against the yen, off its early lows of 1.1528, 1.1711 and 128.59, respectively. The euro is poised to challenge resistance around 1.17 against the franc, 1.18 against the greenback and 131.00 against the yen.

The euro rose to 0.8767 against the pound and 1.5239 against the loonie, reversing from its early lows of 0.8738 and 1.5154, respectively. On the upside, 0.89 and 1.53 are likely seen as its next resistance levels against the pound and the loonie, respectively.

The single currency hit a 5-day high of 1.6722 against the kiwi, after having fallen to 1.6621 at 2:45 am ET. The next possible resistance for the euro is seen around the 1.68 level.

Data from Statistics New Zealand showed that New Zealand total building activity fell a seasonally adjusted 0.9 percent on quarter in the first three months of 2018.

That was well shy of forecasts for an increase of 0.5 percent following the downwardly revised 1.0 percent gain in the previous three months.

The 19-nation currency appreciated to 1.5392 against the aussie, after dropping to 1.5283 at 1:30 am ET. The euro is seen finding resistance around the 1.55 region.

Data from the Australian Bureau of Statistics showed that Australia's gross domestic product rose a seasonally adjusted 1.0 percent on quarter in the first three months of 2018.

That exceeded expectations for an increase of 0.8 percent following the 0.4 percent gain in the previous three months.

Looking ahead, U.S. and Canadian trade data for April, Ivey PMI for May and Canada building permits for April are scheduled for release in the New York session.

At 11:00 am ET, the Bank of England member Ian McCafferty will discuss the economic outlook and monetary policy in a phone-in interview conducted by Iain Dale on LBC Radio.

For comments and feedback: contact editorial@rttnews.com

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