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Euro Climbs As ECB Lagarde Sees Stabilization In Growth Slowdown

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The euro moved up against its major trading partners in the European session on Thursday, after European Central Bank Chief Christine Lagarde suggested that there were encouraging signs of stabilization in the euro area growth slowdown and a moderate increase in inflation pressures despite continued global growth worries.

In her first press conference as the ECB President, Lagarde said that there were some indications of a mild increase in inflation pressures and stabilization in the slowdown of economic growth.

The risks surrounding the euro area growth outlook remain tilted to the downside, but was slightly "less pronounced," she told.

"Ongoing employment growth and rising wages continue to underpin the resilience of the euro area economy."

Although incoming economic data and survey information pointed to weak growth dynamics, there were some stabilization in the growth slowdown, Lagarde said.

The comprehensive package of stimulus measures would help support the euro area expansion, the ongoing build-up of domestic price pressures and the convergence of inflation to the target.

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.

Data from Eurostat showed that Eurozone industrial production decreased for the second straight month, largely driven by weak capital goods output in October.

Industrial output dropped 0.5 percent in October from September, when production was down 0.1 percent. This was the second straight decline and the biggest fall since June.
The euro rose against its major counterparts in the previous session, except the pound.

The euro added 0.3 percent to over a 5-week high of 1.1154 against the greenback, recovering from a low of 1.1125 set at 4:45 am ET. At Wednesday's close, the pair was worth 1.1129. The euro is seen facing resistance around the 1.13 region.

After falling to 120.76 at 7:00 pm ET, the euro appreciated 0.3 percent to over a 5-week high of 121.12 against the yen. The pair was quoted at 120.82 at Wednesday's close. Next immediate resistance for the euro is seen around the 123.00 level.

Data from the Cabinet Office showed that Japan core machine orders fell a seasonally adjusted 6.0 percent on month in October - coming in at 798.8 billion yen.

That missed forecasts for an increase of 0.7 percent following the 2.9 percent decline in September.

The single currency was 0.8 percent higher at an 8-day high of 0.8491 versus the pound, following a decline to 0.8420 at 8:45 pm ET. The pair had finished Wednesday's deals at 0.8434. The euro is likely to challenge resistance around the 0.86 level.

Survey data from the Royal Institution of Chartered Surveyors showed that UK house prices declined at the fastest pace since April as uncertainties from Brexit and general election weighed on the property market.

The house price balance fell to -12 in November from -5 in October.

The euro reversed from an early low of 1.0924 against the franc, with the pair trading at 1.0941. The currency is thus few pips short of a 3-day peak of 1.0948 logged in the Asian session. Should the euro strengthens further, it is likely to test resistance around the 1.12 region.

Switzerland's central bank maintained its negative interest rates and expressed willingness to intervene in the currency market as required.

The Swiss National Bank retained its policy rate and interest on sight deposits at the SNB at -0.75 percent. The decision came in line with expectations.

The EUR/CAD pair gained 0.3 percent, approaching an 8-day high of 1.4700. The euro was trading at 1.4661 per loonie at yesterday's close. Further rise in the euro may face resistance around the 1.48 area.

In contrast, the euro held steady against the aussie, after having declined to a 9-day low of 1.6149 at 6:15 am ET. The euro-aussie pair was worth 1.6185 at Wednesday's close.

The euro was trading lower at 1.6913 against the kiwi, after rising to 1.6932 at 11:30 pm ET. At yesterday's trading close, the pair was quoted at 1.6901. The euro may face support around the 1.66 region, if it falls again.

In today's events, Bank of Canada Governor Stephen Poloz will give a speech about Canada's economic outlook for 2020 at the Empire Club of Canada in Toronto at 12:30 pm ET.

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