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Euro Climbs After ECB Holds Rate, PEPP Steady

The euro spiked up against its major counterparts in the European session on Thursday, after the European Central Bank left its key interest rates and the size of the pandemic emergency purchase programme unchanged as expected. Investors await President Christine Lagarde's press conference for hints about the euro's recent rise and its impact on inflation.

The Governing Council maintained the main refi rate at a record low of zero percent and the deposit rate at -0.50 percent. The marginal lending facility rate is at 0.25 percent.

"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% within its projection horizon, and such convergence has been consistently reflected in underlying inflation dynamics," the bank said.

The Governing Council retained the pandemic emergency purchase programme at EUR 1.35 trillion.

Net asset purchases under the PEPP will be conducted until at least the end of June 2021 and, in any case, until the Governing Council judges that the coronavirus crisis phase is over.

The ECB will also continue its asset purchases under the asset purchase programme at a monthly pace of EUR 20 billion and an additional EUR 120 billion temporary envelope until the end of this year.

The currency was higher against its major counterparts in the Asian session, except the franc.

The euro advanced to 0.9153 against the pound, its highest level since June 29. The euro-pound pair had finished yesterday's trading session at 0.9076. The euro is seen finding resistance around the 0.93 mark.

Survey data from the Royal Institution of Chartered Surveyors showed that UK house prices increased at the strongest pace since 2016 as almost all regions logged price increases.

The house price balance rose to +44 percent in August, the highest reading since 2016, from +13 percent registered in July. The expected balance was +25 percent.

The euro appreciated to a 6-day high of 1.1855 against the greenback, from Wednesday's closing value of 1.1803. The next possible resistance for the euro is seen around the 1.20 level.

The euro rallied to a 3-day high of 125.80 against the yen, compared to Wednesday's closing quote of 125.32. The euro is poised to find resistance around the 127.5 level.

Data from the Cabinet Office showed that Japan core machine orders gained a seasonally adjusted 6.3 percent on month in July - coming in at 751.3 billion yen.

That beat expectations for an increase of 1.9 percent following the 7.6 percent decline in June.

The euro rebounded to 1.6293 against the aussie, 1.7755 against the kiwi and 1.5569 against the loonie, after falling to 1.6197, 2-day lows of 1.7652 and 1.5509, respectively in early deals. If the euro rises further, it may find resistance around 1.66 against the aussie, 1.82 against the kiwi and 1.58 against the loonie.

The euro held steady against the franc, after having recovered from a 10-day low of 1.0750 seen at 5:15 am ET. At Wednesday's close, the pair was valued at 1.0769.

Looking ahead, U.S. wholesale inventories for July will be out in the New York session.

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