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Forex News: Euro Higher As ECB Minutes Show Clash On

Euro Higher As ECB Minutes Show Clash On QE Program

10/10/2019 - 10:05:00 (RTTNews)

(RTTNews) - The euro was higher against its major counterparts in the European session on Thursday, after minutes from the European Central Bank's September policy meeting showed opposition from several policy makers about restarting the quantitative easing program.

A number of policymakers assessed the need for renewed net asset purchases as not sufficiently strong, either because they deemed them to be a less efficient instrument or due to an apprehension that it should be deployed as an instrument of last resort in the event of more severe contingencies and which was not warranted in the light of the current outlook, the minutes of the September 11-12 Governing Council meeting showed.

There was disagreement on the size and instruments included in the stimulus package.

Observation was made that an open-ended announcement of renewed net asset purchases could give rise to demands by market participants for higher monthly purchase amounts, at least in the absence of convincing evidence of an improving inflation outlook, the minutes showed.

But all members agreed on the need to act in response to the continued shortfall of inflation and that a clear majority of members supported the proposed measures.

While a few members expressed a readiness to lower the deposit facility rate by 20 basis points, other members opposed a reduction of 10 basis points on concerns about its possible adverse side effects.

Data from Destatis showed that Germany's exports declined the most in four months, while imports recovered at a faster than expected pace.

Exports fell by more-than-expected 1.8 percent month-on-month in August, reversing a 0.8 percent rise in July. Exports were forecast to fall 1 percent.

The euro strengthened against its major counterparts in the Asian session, excepting the pound.

The euro hovered at nearly a 3-week high of 1.1034 versus the greenback, from Wednesday's closing value of 1.0971. Next immediate resistance for the euro is seen around the 1.12 level.

Data from the Labor Department showed that U.S. consumer prices were essentially flat in September.

The Labor Department said its consumer price index was unchanged in September after inching up by 0.1 percent in August. Economists had expected another 0.1 percent uptick.

The single currency that ended Wednesday's trading at 1.0926 against the franc climbed to a 6-day high of 1.0956. The euro is seen facing resistance around the 1.13 level.

Extending early rally, the euro climbed to 118.66 against the yen, its strongest level since September 23. On the upside, 122.00 is likely seen as the next resistance level for the euro.

Data from the Bank of Japan showed that Japan producer prices were flat on month in September - matching forecasts following the 0.3 percent decline in August.

On a yearly basis, producer prices were down 1.1 percent - again in line with expectations after sliding 0.9 percent in the previous month.

The euro appreciated to 0.9019 versus the pound, a level unseen since September 5. The currency is likely to locate resistance around the 0.92 level.

Data from the Office for National Statistics showed that the UK economy expanded in three months to August for the second consecutive time suggesting that it is on the course to avoid a recession ahead of Brexit.

Rolling three-month gross domestic product growth increased to 0.3 percent from 0.1 percent in three months to July. This was also faster than the expected 0.1 percent rise.

The euro climbed to a 3-week high of 1.4690 against the loonie and held steady thereafter. Should the euro rises further, 1.49 is possibly seen as its next resistance level.

The euro rose back to 1.7461 against the kiwi, heading towards a weekly high of 1.7497 set in the Asian session. The next possible resistance for the euro is seen around the 1.78 level.

The euro was trading at 1.6322 against the aussie. This may be compared to a 1-1/2-month high of 1.6370 it touched at 7:00 pm ET. The pair had ended yesterday's trading session at 1.6313.

Data from the Australian Bureau of Statistics showed that Australia home loans rose a seasonally adjusted 3.2 percent on month in August - coming in at 33,468.

That exceeded expectations for an increase of 2.3 percent following the upwardly revised 4.3 percent increase in July.

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