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Forex News: Euro Weakens As ECB's Constancio Cautions Over Sudden

Euro Weakens As ECB's Constancio Cautions Over Sudden Currency Movements

01/17/2018 - 04:48:00 (RTTNews)

(RTTNews) - The euro declined against its major counterparts in the early European session on Wednesday, after the European Central Bank Vice President Vitor Constancio cautioned about the recent strength in the single currency and said that the bank is unlikely to make immediate changes to forward guidance.

"I am concerned about sudden movements which don't reflect changes in fundamentals," Constancio said in an interview with Italy's La Repubblica newspaper, published today.

Regarding fundamentals, inflation was slightly down in December, he said.

"We see the need for a gradual adjustment of all the elements of our forward guidance if the economy continues to grow and inflation continues to move toward our goal," Constancio said.

"This does not mean that changes will be immediate," he added.

In economic news, data from the European Automobile Manufacturers' Association showed that Europe's new passenger car registrations declined at the end of the year.

Passenger car sales declined 4.9 percent year-over-year to 1,088,498 units in December, mainly the result of the fact that December had one working day less in 2017 than in the preceding year.

The euro was higher against its major rivals in the Asian session.

Pulling away from an early high of 1.5410 against the aussie, the euro edged down to 1.5361. If the euro falls further, 1.53 is likely seen as its next support level.

Following a 4-week high of 1.5295 hit at 7:45 am ET, the euro reversed direction and edged down to 1.5200 against the loonie. The next possible support for the euro is seen around the 1.51 mark.

The 19-nation currency retreated to 1.2208 against the greenback, from more than a 3-year high of 1.2323 hit at 7:45 pm ET. Continuation of the euro's downtrend may see it challenging support around the 1.19 mark.

After rising to 1.1802 against the franc at 7:45 pm ET, the euro dropped back to 1.1761. Further downtrend may see the euro challenging support around the 1.16 mark.

The euro reversed from an early 2-day high of 0.8908 against the pound, falling to 0.8868. The euro is seen finding support around the 0.86 area.

The IPA Bellwether report from IHS Markit showed that the marketing budgets of UK private sector companies expanded at the slowest pace in nearly two years in the fourth quarter of 2017. A net balance of 8.6 percent of companies raised their marketing budget compared to 9.9 percent in the previous quarter. This was the lowest since early 2016.

The single currency eased back to 135.24 against the yen, from a high of 135.90 hit at 11:45 pm ET. On the downside, 133.00 is likely seen as the next support for the euro.

Data from the Cabinet Office showed that Japan's core machine orders rose a seasonally adjusted 5.7 percent on month in November.

That beat expectations for a decline of 1.2 percent on month following the 5.0 percent jump in October.

The euro dropped to 1.6839 against the kiwi, after having advanced to near a 2-week high of 1.6937 at 11:45 pm ET. Next key support for the euro may be found around the 1.66 region.

Looking ahead, Eurozone CPI for December and construction output for November are set for release in the European session.

The Bank of England member Michael Saunders speaks at the Financial Intermediary and Broker Association inaugural conference in London at 6:45 am ET.

In the New York session, U.S. industrial production for December, NAHB housing market index for January and Fed's Beige book report are set for release.

At 10:00 am ET, the Bank of Canada announces decision on interest rates. Economists forecast the benchmark rate to rise to 1.25 percent from 1.00 percent.

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