16.07.202012:49:00UTC+00Euro Climbs After ECB Maintains Rates, PEPP Program

The euro advanced against its most major rivals in the European session on Thursday, after the European Central Bank kept its key interest rates and the size of the pandemic emergency purchase programme unchanged to support Eurozone economy.

The Governing Council left 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 decision was in line with expectations.

"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 decided to retain the pandemic emergency purchase programme at EUR 1.35 billion.

Net asset purchases under the PEPP will be conducted until at least the end of June 2021. The bank said it will reinvest proceeds from maturing bonds in the scheme at least until the end of 2022.

Data from Eurostat showed that the euro area trade surplus increased sharply in May as the relaxation of coronavirus containment measures boosted both exports and imports.

The trade surplus rose to a seasonally adjusted EUR 8 billion from EUR 1.6 billion in April.

The euro showed mixed performance against its major peers in the Asian session. While it fell against the greenback and the yen, it climbed against the pound and the franc.

The euro gained to 0.9095 versus the pound, up from yesterday's closing value of 0.9065. The euro is seen finding resistance around the 0.92 mark.

Data from the Office for National Statistics showed that the UK unemployment remained unchanged in three months to May.

In three months to May, the jobless rate was largely unchanged at 3.9 percent, well below economists' forecast of 4.2 percent.

The euro recovered to 1.1418 against the greenback, from a 2-day low of 1.1378 seen at 6:00 am ET. The pair had closed Wednesday's deals at 1.1412. Next key resistance for the euro is likely seen around the 1.17 level.

The euro rallied to 122.35 against the yen, after falling to 121.82 at 2:15 am ET. The pair was worth 122.02 when it ended deals on Wednesday. The euro is likely to face resistance around the 124.00 region, if it gains again.

The euro spiked up to 1.0796 against the franc, its biggest level since June 9. At Wednesday's close, the pair was valued at 1.0776. Should the euro strengthens further, it is likely to test resistance around the 1.09 region.

Looking ahead, U.S. NAHB housing market index for July and business inventories for May will be featured in the New York session.

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