Euro firms ahead of ECB monetary meeting: Dec8, 2016

Market Review - 07/12/2016   22:29GMT  

Euro firms ahead of ECB monetary meeting

The single currency firmed against the greenback on Wednesday as investors remained cautious ahead of ECB's rate decision on Thursday. 

Earlier in the day, euro currency traded sideways in Asia and gained to 1.0733 in early European morning, then rose to an intra-day high at 1.0768 in New York morning as investors remained cautious ahead of Thursday's ECB rate decision. 

Versus the Japanese yen, despite the greenback's retreat from 114.31 to 113.96 in Asia, price rose to session high at 114.40 at European open. However, dollar pared its gains and dropped to 113.90, then to 113.42 in New York morning on dollar's broad-based weakness before staging a recovery. 

The British pound remained under pressure in Asia and resumed its recent losing streak and tumbled to 1.2570 in European morning, then to an intra-day low at 1.2570 in New York morning on the back of downpeat UK output data. However, price pared its losses and staged a short-covering rebound to 1.2628 at New York close. 

The U.K. Office for National Statistics said that manufacturing production fell by a seasonally adjusted 0.9% in October, worse than expectations for a gain of 0.2% and following a rise of 0.6% in the prior month. 

The report also showed that industrial production unexpectedly decreased by a seasonally adjusted 1.3% in October, compared to forecasts for a 0.2% rise and following the 0.4% decline in the preceding month. 

In other news, BOJ Deputy Governor Iwata said ' won't hesitate to take additional easing steps if needed to sustain momentum toward hitting 2 pct inflation; no change to BOJ's approach of promoting powerful monetary easing via asset purchases, interest rates; want to stress anew that monetary base will continue to expand under BOJ's new policy framework; yield curve control can be achieved only by massive JGB buying by BOJ; some argue that BOJ has shifted policy focus from quantity to interest rates but such understanding is inappropriate; Japan's economy likely to continue expanding moderately; exports likely to increase moderately from fiscal 2017; Japan consumer inflation to remain flat or slightly negative for time being, then gradually accelerate toward 2 pct; very important for wages to rise for japan to see inflation accelerate as a trend.' 

Data to be released on Thursday: 

Japan current account, GDP, Australia trade balance, imports, exports, China trade balance, imports, exports, UK RICS house price, EU rate decision, U.S. jobless claims and Canada building permits.