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Euro Falls As ECB Mario Draghi Defends Sept. Stimulus Measures

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The euro depreciated against its key counterparts in the European session on Thursday, after the European Central Bank President Mario Draghi indicated that recent weak economic data justified that the central bank was appropriate to announce a raft of stimulus measures last month.

In his press conference in Frankfurt, Draghi said that the incoming data since the last meeting confirmed the previous assessment of a protracted weakness in euro area growth momentum, the persistence of prominent downside risks and muted inflation pressures.

The risks surrounding the euro area growth outlook remained on the downside, Draghi cautioned.

These risks reflect the prolonged presence of uncertainties arising from geopolitical factors, rising protectionism and vulnerabilities in emerging markets.

Draghi said that latest stimulus package would help support the euro area expansion, the ongoing build-up of domestic price pressures and the sustained convergence of inflation to medium-term inflation aim.

The ECB retained the main refinancing rate at its record low 0 percent and the deposit rate at -0.50 percent after the latest Governing Council meeting.

The marginal lending facility rate was kept unchanged at 0.25 percent.

The bank also retained its forward guidance on both interest rates and asset purchases.

"The Governing Council expects the key ECB interest rates to remain at their present or lower levels until it has seen the inflation outlook robustly converge to a level sufficiently close to, but below, 2 percent within its projection horizon, and such convergence has been consistently reflected in underlying inflation dynamics," the bank said.

Soft PMI readings from Germany and Eurozone triggered a pull back in the euro earlier in the European session.

Survey data from IHS Markit showed that the euro area private sector remained close to stagnation in October as manufacturing continued to shrink amid subdued expansion in services activity.

The flash composite output index rose slightly to 50.2 in October from 50.1 in September. A score above 50 indicates expansion, and that below 50 suggests contraction. The score was forecast to improve to 50.3.

The currency held steady against its major counterparts in the Asian session.

The euro slipped to 1.1111 against the greenback, down by 0.5 percent from a 3-day high of 1.1163 hit at 3:15 am ET. At Wednesday's close, the pair was worth 1.1131. The euro is seen finding support around the 1.09 region.

After rising to a 3-day high of 121.39 at 3:15 am ET, the euro slipped 0.7 percent to 120.54 against the yen. The pair was quoted at 120.98 at Wednesday's close. Next immediate support for the euro is seen around the 118.00 level.

Final data from the Cabinet Office showed that Japan's leading index fell less than estimated in August but remained at the lowest level in nearly ten years in August.

The leading index, which measures the future economic activity, fell to 91.9 in August from 93.7 in July. The initial estimate was 91.7.

The single currency was 0.3 percent lower at 1.1010 versus the Swiss Franc, following a 1-week high of 1.1042 seen at 3:15 am ET. The pair had finished Wednesday's deals at 1.1023. The euro is poised to challenge support around the 1.09 level.

The euro was trading lower at 1.7388 against the kiwi, after rising to a 3-day high of 1.7434 at 3:15 am ET. At yesterday's trading close, the pair was quoted at 1.7333. Continuation of the euro's downtrend may lead it to a support around the 1.70 region.

Reversing from an early 2-day high of 1.4590 against the loonie, euro slipped to a new 3-week low of 1.4528. The pair had ended yesterday's trading session at 1.4548. On the downside, 1.42 is possibly seen as the next support level for the euro.

The euro held steady against the aussie, after having eased from a weekly high of 1.6310 it touched at 3:15 am ET. The euro-aussie pair was trading at 1.6239 at Wednesday's close.

Survey data from IHS Markit showed that Australia's private sector logged a weaker growth in October.

The Commonwealth Bank of Australia Flash Composite Output Index dropped to 50.7 in October from 52.0 in September. A score above 50 indicates expansion.

In contrast, the single currency appreciated to 0.8654 against the pound, rebounding from a 2-day low of 0.8600 seen at 3:00 am ET. The pair was valued at 0.8615 when it ended trading on Wednesday. The euro is likely to face resistance around the 0.88 region, if it gains again.

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