The euro added gains on Thursday from near a five-week low against the greenback, following the release of the Federal Reserve (Fed) minutes from the December meeting and ahead of the ECB meeting.
The euro rose 0.24% higher at $1.3607 against the US dollar at the time of writing, after dropping to $1.3554 yesterday, the lower since Dec 5. The euro was 0.4% higher to 142.90 yen.
Minutes from the Federal Reserve’s (Fed) December meeting showed that officials supported tapering its stimulus, boosting the US dollar.
“A majority of participants judged that the marginal efficacy of purchases was likely declining as purchases continue, although some noted the difficulty inherent in making such an assessment,” the Fed minutes stated.
The European Central Bank (ECB) meeting in Frankfurt is scheduled to commence today, with predictions that the bank will keep their benchmark rate unchanged at a record low 0.25% and their rate of marginal lending facility at 0.75%, according to analysts.
“Any indication that new liquidity will be provided may prove slightly short term euro negative by pushing term euro rates lower (our preferred view), but if his comments suggest no new liquidity measures, any short term euro gains that result from higher euro yields seem unlikely to be sustained, as credit concerns seem likely to emerge. The euro bias may consequently be slightly to the downside,” Lloyds Bank commented on Thursday.
The US labour market is one of the main factors which persuade the Fed’s monetary decisions. Market participants are focused on the labour report which is expected to be released on Friday, as analysts forecast 195,000 jobs was added in December after adding positions by 203,000 in November.
According to the ADP employment report, the US private sector hired 238,000 new employees in December, compared to 200,000 forecasted by analysts.
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