Euro Muted After ECB Minutes
25 Juni 2020 - 12:42PM
RTTF2
The euro showed muted trading against its major counterparts in
the European trading session on Thursday, after minutes from the
European Central Bank's June meeting showed that policymakers
agreed that purchases of government bonds under the pandemic
emergency purchase programme and the asset purchase programme were
an effective tool for delivering the price stability goal in the
current environment.
Members broadly agreed that while different weights might be
attached to the benefits and side effects of asset purchases, the
negative side effects had so far been clearly outweighed by the
positive effects of asset purchases on the economy in the pursuit
of price stability, the minutes from the bank's June 3-4 meeting
showed.
ECB policymakers broadly agreed to increase the size of the PEPP
by €600 billion and extend the horizon for net purchases under the
scheme to at least the end of June 2021.
Members observed that expanding the size of the PEPP would help
support the smooth transmission across the euro area, it added.
Survey results from market research group GfK showed that German
consumer sentiment is set to recover next month reflecting the
rapid reopening of the economy and society.
The forward-looking consumer sentiment index rose to -9.6 in
July from revised -18.6 in June. The score was forecast to rise
moderately to -12.
The euro showed mixed trading against its major opponents in the
Asian session. While it rose against the yen and the franc, it fell
against the greenback. Against the pound, it held steady.
The euro declined to a 3-day low of 1.1190 against the greenback
and a new 4-week low of 1.0635 against the franc, from its early
highs of 1.1260 and 1.0677, respectively. The next likely support
for the euro is seen around 1.10 against the greenback and 1.045
against the franc.
The euro depreciated to a 1-week low of 0.9001 against the
pound, after rising to 0.9065 at 8:00 pm ET. The euro is seen
finding support around the 0.88 region.
The Distributive Trades Survey data from the Confederation of
British Industry showed that UK retailers reported a steep fall in
sales in June but stronger growth for grocers and stable volumes in
the specialist food and drink sector ensured a slower pace of
decline than in May.
A balance of -37 percent said sales declined in June compared to
-50 percent in May. This was weaker than the expected rate of -34
percent. A net 48 percent forecast sales to decrease further next
month.
The euro pulled back from its early high of 120.62 against the
yen and weakened to 120.14. The euro is poised to challenge support
around the 117.00 level.
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