Euro Weakens Ahead Of ECB Minutes

November 19, 2015

Canbera-Australia (Nov 19)  The euro traded in a negative territory in early European deals on Thursday, as investors await the minutes of the  European Central Bank's  October meeting, which spurred speculation about further easing measures at its December meeting.

The  ECB  releases the minutes of its  October 21-22  meeting at  7:30 am ET  . Investors await more details about the council members' support for an aggressive deposit rate cut and change in its asset purchase program, after the bank highlighted concerns over downside risks prevailing in the euro region.

The  ECB  President  Mario Draghi  has given strong hints for more easing at the  October 22  meeting, which was backed again in his testimony to the  European Parliament  .

 Eurozone  bond yields also turned lower, as government bonds saw demand on hopes for more easing. German 10-year government bond yield fell 0.49%, while that of 10-year note slipped 1.17%. Yields move inversely to bond prices.

Data from the  European Central Bank  showed that the euro area current account surplus increased to an 8-month high in September.

The current account surplus rose to  EUR 29.4 billion  from  EUR 18.7 billion  in August. It was the highest since January, when the surplus totaled  EUR 30.6 billion  .

The euro was modestly higher in Asian deals, as risk-on mood prevailed after the  Federal Reserve's  October policy meeting suggested a likely interest rate increase in December.

The single currency eased to 131.43 against the yen and 1.0667 against the greenback, from its early 6-day high of 132.27 and 3-day high of 1.0718, respectively. The next possible support levels for the euro may be found around 130.00 against the yen and 1.05 against the greenback.

The euro slipped to a weekly low of 1.6347 against the kiwi, while touching 1.4879 against the aussie, its lowest since  August 10  . If the euro weakens further, 1.62 and 1.47 are possibly seen as its next support levels against the kiwi and the aussie, respectively.

The 19-nation currency fell to 1.4143 against the loonie for the first time since  July 22  . Continuation of the euro's downtrend may see it challenging support around the 1.40 zone.

On the flip side, the euro rebounded to 0.7016 against the pound, from its prior low of 0.6983, as the latter declined after  UK  retail sales. The pair finished yesterday's trading at 0.6996.

Data from the  Office for National Statistics  showed that  UK  retail sales declined more than expected in October.

Retail sales decreased 0.6% month-on-month in October, reversing a 1.7% rise in September. Economists had forecast a 0.5% fall.

The euro turned higher against the franc also, touching more than a 2-week high of 1.0889. This may be compared to a low of 1.0861 hit at  2:15 am ET  . The euro is likely to locate resistance around the 1.095 zone.

Data from the  Swiss Federal Customs Administration  showed that Swiss trade surplus increased in October as exports grew faster than imports.

The trade surplus rose to  CHF 4.2 billion  in October from  CHF 3.3 billion  in the previous month.

Looking ahead,  Canada  wholesale sales for September, US weekly jobless claims for the week ended  November 14  and leading indicators for October are slated for release in the  New York  session.

The  Swiss National Bank's  Governing Board Member  Andrea Maechler  speaks at the Money Market event in  Geneva  at  12:30 pm ET  .

At the same time, the  Federal Reserve Bank of Atlanta  President  Dennis Lockhart  will speak about the US economy at the  DeKalb Chamber of Commerce  meeting in  Atlanta  .

At  4:45 pm ET  , the Federal Reserve Governor  Stanley Fischer  gives a speech titled "Emerging Asia in Transition" at the Federal Reserve Bank of  San Francisco  .

Source: RTTnews

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