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Euro Lower After ECB Minutes

07:42, 8th April 2021

(RTTNews) - The euro was weaker against its most major opponents in the European session on Thursday, as the minutes from the European Central Bank's March meeting showed that members broadly agreed that a significant increase in the pace of its asset purchases was warranted by the observed tightening of financing conditions and the lack of a material improvement in the growth and inflation outlook.

Policy makers expressed broad support for proposal to conduct purchases under the PEPP over the next quarter at a significantly higher pace than during the first few months of the year, the minutes from the ECB's March 10-11 policy meeting showed.

Some policymakers argued that a more moderate increase in the pace would better reflect the assessment of more balanced risks to the outlook, also in the light of previous decisions when a similar pace had been chosen but economic conditions had been worse.

"The Governing Council needed to avoid giving the impression of being overly focused on sovereign yields or reacting mechanically to a set of indicators of financing conditions," the minutes said. There was wide agreement that the flexibility embodied in the PEPP was symmetric, implying that the purchase pace could be increased and decreased according to market conditions, the minutes added.

ECB members agreed that the governing Council would undertake a quarterly joint assessment of financing conditions and the inflation outlook to determine the pace of purchases required to keep financing conditions favourable.

Data from Destatis showed that Germany's factory orders growth accelerated in February driven by domestic demand.

Factory orders grew 1.2 percent month-on-month in February, faster than the 0.8 percent increase in January. The monthly growth matched economists' expectations.

The euro showed a mixed trend against its major rivals in the Asian session. While it fell against the yen, it was steady against the pound and the franc. Versus the greenback, it climbed.

The euro fell to an 8-day low of 129.57 against the yen from Wednesday's close of 130.37. The euro is seen finding support around the 126.00 region.

Data from the Cabinet Office showed that Japan's consumer confidence rose to the highest level in thirteen months in March.

On a seasonally adjusted basis, the consumer confidence index increased to 36.1 in March from 33.9 in February.

The euro declined to 1.1006 against the franc, its lowest level since March 17. At Wednesday's close, the pair was valued at 1.1026. Should the euro slides further, 1.07 is likely seen as its next support level.

The euro retreated to 0.8627 against the pound, after climbing to 0.8657 at 4:45 am ET. The euro-pound pair had finished yesterday's trading session at 0.8639. The euro may locate support around the 0.84 level.

Survey data from IHS Markit showed that the UK construction sector grew at the fastest pace since 2014 in March, underpinned by strong rises in house building, commercial work and civil engineering.

The Chartered Institute of Procurement & Supply construction Purchasing Managers' Index rose to 61.7 in March from 53.3 in February. This was the fastest expansion since September 2014.

The euro edged down to 1.6845 against the kiwi, compared to Wednesday's close of 1.6914. The euro is likely to challenge support around the 1.64 mark.

In contrast, the euro rebounded to 1.5580 against the aussie and 1.4996 against the loonie, from its prior lows of 1.5528 and 1.4945, respectively. Next key resistance for the euro is likely seen around 1.57 against the aussie and 1.51 against the loonie.

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