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Euro Advances As ECB Removes Easing Bias On QE


The euro climbed against its major counterparts in the European session on Thursday, after the European Central Bank kept its key interest rates and asset purchases unchanged, but dropped its easing bias on asset purchases if outlook turned less favorable.

The Governing Council, led by ECB President Mario Draghi, left the key interest rates unchanged after the policy session in Frankfurt, in line with economists' expectations.

The main refi rate is currently at a record low zero percent and the deposit rate at -0.40 percent. The marginal lending facility rate is 0.25 percent.

There was also a change in the forward guidance with bank omitting the mention of its stance that it will boost the asset purchases, should outlook worsens.

"The Governing Council expects the key ECB interest rates to remain at their present levels for an extended period of time, and well past the horizon of the net asset purchases," the ECB reiterated.

The bank also confirmed that the net asset purchases, at the new monthly pace of EUR 30 billion, are intended to run until the end of September 2018, or beyond, if necessary, and in any case until the Governing Council sees a sustained adjustment in the path of inflation consistent with its inflation aim.

In economic news, figures from Destatis showed that Germany's factory orders declined more than expected in January.

New orders in manufacturing dropped 3.9 percent month-on-month in January, reversing a revised 3 percent rise in December. Orders were forecast fall moderately by 1.8 percent.

The currency fell against its major counterparts in the Asian session.

The euro advanced to 0.8948 against the pound, from a 2-day low of 0.8917 seen at 6:15 am ET. The euro is poised to challenge resistance around the 0.92 mark.

Survey data from the Royal Institution of Chartered Surveyors showed that UK house prices stabilized in February and property coming to the market for sale declined.

The net house price balance fell to zero in February.

The single currency firmed to 1.1733 against the Swiss franc, a level unseen since January 25. At Wednesday's close, the pair was valued at 1.1709. The euro is seen challenging resistance around the 1.18 area.

Reversing from an early 2-day low of 1.2369 against the greenback, the euro climbed to 1.2431. Continuation of the euro's uptrend may see it challenging resistance around the 1.26 level.

The 19-nation currency advanced to a 2-day high of 131.92 against the yen, following a decline to 131.21 at 6:15 am ET. Next key resistance for the euro is likely seen around the 133.00 level.

Data from the Cabinet Office showed that Japan's gross domestic product rose a seasonally adjusted 0.4 percent on quarter in the fourth quarter of 2017.

That exceeded expectations for an increase of 0.2 percent after last month's preliminary reading suggested a gain of 0.1 percent.

The euro appreciated to 1.6057 against the loonie, reversing from a 3-day drop to 1.5960 at 9:30 pm ET. Further uptrend may take the euro to a resistance around the 1.63 level.

After falling to a 2-day low of 1.5831 against the aussie at 9:30 pm ET, the euro reversed direction and moved up to 1.5926. If the euro continues its strength, 1.61 is possibly seen as its next resistance level.

The euro spiked up to near a 3-month high of 1.7118 against the kiwi, after having fallen to 1.7001 at 11:15 pm ET. On the upside, 1.73 is possibly seen as the next resistance for the euro.

Looking ahead, at 11:00 am ET, the Bank of Canada Governor Stephen Poloz speaks at the unveil of the new $10 bank note, in Halifax.

At 3:35 pm ET, the BOC Deputy Governor Timothy Lane speaks about the March interest rate decision at the Vancouver Board of Trade.

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