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Forex News: Euro Falls After ECB Keep Rates Unchanged, To

Euro Falls After ECB Keep Rates Unchanged, To Cut QE From Jan 2018

10/26/2017 - 08:32:00 (RTTNews)

(RTTNews) - The euro declined against its major opponents in the European session on Thursday, after the European Central Bank left is key rates unchanged and hinted at the reduction in the size of its monthly asset purchases to EUR 30 billion from the start of next year.

"Purchases under the asset purchase programme (APP) will continue at the current monthly pace of EUR 60 billion until the end of December 2017," the bank said.

"From January 2018 the net asset purchases are intended to continue at a monthly pace of EUR 30 billion until the end of September 2018, or beyond, if necessary, and in any case until the Governing Council sees a sustained adjustment in the path of inflation consistent with its inflation aim."

The Governing Council, led by ECB President Mario Draghi, kept all its three interest rates unchanged for a thirteenth consecutive policy session.

The main refi rate was held at a record low zero percent and the deposit rate at -0.40 percent. The marginal lending facility rate was kept at 0.25 percent.

Draghi is set to hold his customary post-decision press conference at 8.30 am ET when he will detail the rationale behind the latest policy decisions.

Data from the European Central Bank showed that Eurozone broad money supply rose at a faster pace and private sector credit logged a stable growth in September.

The broad monetary aggregate M3 climbed 5.1 percent year-on-year, slightly faster than the 5 percent increase seen in August. M3 was forecast to grow again by 5 percent in September.

The currency was higher against most major rivals in the Asian session, amid expectations that ECB may signal a more hawkish approach when it concludes meeting today.

The euro retreated to 0.8905 against the pound, from a high of 0.8957 hit at 5:15 am ET. The next possible support for the euro-pound pair is seen around the 0.88 region.

The Distributive Trades Survey from the Confederation of British Industry showed that British retailers reported a sharp contraction in sales, disappointing expectations for a solid expansion.

A net balance of -36 percent said sales declined in October from a year ago, the biggest since March 2009.

Having advanced to a 6-day high of 1.1837 against the greenback at 1:15 am ET, the euro reversed direction and fell to 1.1758. The euro is seen finding support around the 1.16 region.

The euro eased back to 1.1677 against the franc, off its early near a 34-month high of 1.1711. Further downtrend may see the euro finding support around the 1.15 area.

The euro reversed from an early high of 134.49 against the yen, dropping to a 2-day low of 133.61. Continuation of the euro's downtrend may see it challenging support around the 132.00 mark.

Data from the Bank of Japan showed that Japan's producer prices rose 0.9 percent on year in September.

That exceeded expectations for 0.8 percent, which would have been unchanged from the August reading.

The euro dropped to 1.7114 against the kiwi, 1.5023 against the loonie and 1.5231 against the aussie, from its early high of 1.7211, 4-1/2-month high of 1.5146 and a 16-1/2-month 1.5393, respectively. On the downside, 1.70, 1.49 and 1.52 are likely seen as the next support levels for the euro against the kiwi, the loonie and the aussie, respectively.

Looking ahead, U.S. weekly jobless claims for the week ended October 21, pending home sales, wholesale inventories and advance trade goods balance for September are set for release in the new York session.

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