2021.04.2215:18:00UTC+00Euro Advances As Lagarde Sees Firm Rebound In Economic Activity This Year

The euro spiked higher against its major trading partners in the European session on Thursday, after the European Central Bank chief Christine Lagarde sounded optimistic about the bloc's economic outlook, saying that the progress in vaccinations and a gradual relaxation of containment measures should support an economic recovery during the course of the year.

In her press conference in Frankfurt, Lagarde said that the recovery in global demand and the fiscal stimulus are supporting global and euro area activity, although the near-term economic outlook remains clouded by uncertainty about the resurgence of the pandemic and the roll-out of vaccination campaigns.

The progress with vaccination campaigns, which should allow for a gradual relaxation of containment measures, should pave the way for a firm rebound in economic activity in the course of 2021, the ECB chief noted.

Over the medium term, the recovery of the euro area economy is likely to be driven by a recovery in domestic and global demand, supported by favourable financing conditions and fiscal stimulus.

While the risks surrounding the euro area growth outlook over the near term continue to be on the downside, medium-term risks remain more balanced, Lagarde added.

Lagarde suggested that a premature withdrawal of fiscal support would risk delaying the recovery and amplifying the long-term scarring effects.

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 retained the pandemic emergency purchase programme at EUR 1.85 trillion.

The purchases under the PEPP will continue to be conducted at a significantly higher pace over the current quarter than during the first months of the year, the bank said in the accompanying statement.

European stocks rose amid continued optimism about earnings and hopes that a momentum shift in vaccination drive will help curb the spread of the Covid-19 pandemic.

The currency showed mixed trading against its major counterparts in the Asian session. While it rose against the greenback, it held steady against the franc and the pound. Versus the yen, it fell.

The euro appreciated 0.3 percent against the greenback, approaching a 2-day high of 1.2069. The pair had closed Wednesday's deals at 1.2034. The currency is likely to locate resistance around the 1.22 level.

The euro added 0.3 percent to reach a 2-day high of 130.47 against the yen. The EUR/JPY pair was worth 130.04 when it ended deals on Wednesday. The euro is seen finding resistance around the 133 level.

The euro was up by 0.7 percent against the pound, at a 6-day high of 0.8702. The euro-pound pair had finished yesterday's trading session at 0.8639. On the upside, 0.88 is likely seen as its next resistance level.

Survey results from the Confederation of British Industry showed that UK manufacturing orders grew at the fastest pace in two years and the optimism among manufacturers rose the most since 1973.

The order book balance rose to +5 percent in three months to April from -12 percent in January, the latest Industrial Trends survey revealed. This was the biggest growth since April 2019.

The euro firmed to a 2-day high of 1.1047 against the franc, up by 0.3 percent from a low of 1.1014 seen at 4:30 am ET. At Wednesday's close, the pair was valued at 1.1034. Should the euro strengthens further, it is likely to test resistance around the 1.13 region.

Data from the Federal Customs Administration showed that Switzerland's exports grew in the first quarter.

Exports increased 4.9 percent sequentially in the first quarter, while imports grew 1.9 percent.

The European currency reached as high as 1.5088 per loonie, up from yesterday's trading close of 1.5037. Immediate resistance for the currency is seen around the 1.52 level.

The euro strengthened to 1.5598 against the aussie, from a low of 1.5505 seen at 8:45 pm ET. The euro-aussie pair was worth 1.5510 at Wednesday's close. Further rally may take the euro to a resistance around the 1.57 area.

Extending early rally, the euro jumped to an 8-day high of 1.6811 against the kiwi. At yesterday's trading close, the pair was quoted at 1.6675. Next near term resistance for the euro is likely seen around the 1.72 level.

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