Euro Slides As ECB Draghi Says Economic Slowdown To Extend This Year

Trading 07 mar 2019 Donner votre avis

The euro fell sharply against its major counterparts in the European session on Thursday, after the European Central Bank President Mario Draghi struck a cautious tone on Eurozone economy, saying that the weakening in economic data pointed to a moderation in growth through the current year, and downgraded inflation and growth outlook for this year and next.

In his customary press conference, Draghi stated the weaker economic momentum is slowing the adjustment of inflation towards the target of below, but close to, 2 percent over the medium term.

The persistence of uncertainties related to geopolitical factors, the threat of protectionism and vulnerabilities in emerging markets appeared to be weighed on economic sentiment, he cautioned.

"Moreover, underlying inflation continues to be muted," he told.

"While there are signs that some of the idiosyncratic domestic factors dampening growth are starting to fade, the weakening in economic data points to a sizeable moderation in the pace of the economic expansion that will extend into the current year," Draghi added.

Eurozone's growth forecasts for this year and next were cut to 1.1 percent and 1.6 percent, from the December projection of 1.7 percent.

Inflation forecast was slashed to 1.2 percent for this year and 1.5 percent for next, from the previous estimates of 1.6 percent and 1.7 percent, respectively.

At its monetary policy meeting in Frankfurt, the Governing Council left the interest rates on the main refinancing operations, the marginal lending facility and the deposit facility unchanged at 0.00 percent, 0.25 percent and -0.40 percent, respectively.

The bank announced the launch of a new series of targeted longer-term refinancing operations, or TLTRO-III, starting in September 2019 and ending in March 2021, each with a maturity of two years.

The central bank also indicated that the interest rates would remain unchanged for the rest of this year, a subtle change from the previous forward guidance on interest rates stating that low rates would prevail "through the summer of 2019."

Data from Eurostat showed that Eurozone's economic growth in the fourth quarter of 2018 matched its earlier estimates and employment gains were also unrevised.

Gross domestic product grew 0.2 percent from the third quarter, when the economy expanded 0.1 percent, revised from 0.2 percent reported earlier.

The currency held steady against its major counterparts in the Asian session, with the exception of the pound.

The euro lost 0.6 percent to near a 3-week low of 1.1255 against the greenback, from a high of 1.1320 touched at 6:15 am ET. The pair had closed Wednesday's deals at 1.1306. Should the euro continues its downtrend, 1.10 is likely seen as its next support level.

The single currency slipped to an 8-day low of 125.85 against the yen and marked a 0.5 percent slide from a high of 126.43 touched at 3:00 am ET. At yesterday's close, the pair was valued at 126.37. Next key support for the euro is seen around the 122.00 mark.

The euro dropped to 1.1346 against the franc, pulling away from a high of 1.1367 seen at 7:30 am ET. The euro was trading at 1.1363 a franc at Wednesday's New York session close. Further downtrend could see the euro possibly seeking support around the 1.12 level.

Data from the State Secretariat for Economic Affairs showed that Switzerland's jobless rate remained steady in February.

The seasonally adjusted jobless rate was 2.4 percent in February, which was the same as seen in January. The outcome matched economists' expectations.

The European currency was 0.8 percent lower at 1.5987 against the aussie, following an uptick to 1.6111 at 7:30 pm ET. The euro-aussie pair was worth 1.6078 at yesterday's close. Continuation of the euro's weakness may see it challenging support around the 1.57 level.

The euro was down 0.7 percent at 1.5111 against the loonie, after having climbed to 1.5212 at 7:00 pm ET. The euro-loonie pair was quoted at 1.5196 when it finished trading on Wednesday. The euro is likely to challenge support around the 1.49 level, if it falls again.

After strengthening to 1.6716 against the kiwi at 7:30 pm ET, the euro pulled back to hit a 2-day low of 1.6617. The pair had ended trading at 1.6707 on Wednesday. The euro is seen finding support around the 1.64 mark.

The euro eased back to 0.8576 against the pound, following an advance to a 2-day high of 0.8625 at 7:35 am ET. The currency is thus heading to pierce a 3-day low of 0.8575 set in the Asian session. The euro was worth 0.8584 per pound at yesterday's close. The euro is poised to find support around the 0.84 level.

Figures from the Lloyds Bank subsidiary Halifax and IHS Markit showed that UK house price inflation accelerated more-than-expected in February to its highest level in six months.

The house price index rose 2.8 percent year-on-year following a 0.8 percent increase in January. Economists had forecast 1 percent growth in house prices.

Looking ahead, U.S. consumer credit for January is scheduled for release in the New York session.

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