CANBERA (dpa-AFX) - The euro declined against its major counterparts in European trading on Wednesday, ahead the European Central Bank's monetary policy announcement on Thursday, with investors looking for any signs to favor an extension to the QE programme scheduled to end in March 2017.
The bank is expected to keep its key rates on hold at its meeting in Frankfurt, following some positive signs of inflation.
The refinancing rate stands at a record low of zero percent, the deposit rate is at minus 0.4 percent and marginal lending facility is at 0.25 percent.
Investors await President Draghi's customary post-meeting press conference for more clues about the time frame of the central bank's €80 billion a month bond buying programme, which will currently run until March.
The currency was also weighed by falling European stocks, as mixed earnings updates induced some caution ahead of the third and last presidential debate between Democratic nominee Hillary Clinton and Republican nominee Donald Trump taking place tonight at the University of Nevada.
In economic front, data from Eurostat showed that Eurozone construction output declined for the first time in five months in August.
Construction output contracted 0.9 percent month-over-month in August, reversing a 1.5 percent gain in the previous month.
The currency showed mixed performance in the Asian session. While the euro held steady against the franc and the yen, it advanced against the greenback and the pound.
Pulling away from an early high of 1.1005 against the greenback, the euro weakened to near a 3-month low of 1.0961. If the euro extends decline, 1.08 is likely seen as its next support level.
The single currency reversed from its prior high of 1.0881 against the Swiss franc, dropping to near a 3-week low of 1.0848. Continuation of the euro's downtrend may see it challenging support around the 1.06 mark.
The euro, having advanced to 114.16 against the Japanese yen at 10:30 pm ET, declined to more than a 3-week low of 113.33. The euro is seen finding support around the 112.00 mark.
Data from the Ministry of Economy, Trade and Industry showed that Japan's all industry activity expanded for the third straight month in August.
The all industry activity index grew 0.2 percent on a monthly basis in August, the same rate as registered in July and matched economists' expectations.
Following a high of 0.8958 hit at 5:45 am ET against the pound, the euro weakened to 0.8915. The euro is poised to find support around the 0.86 zone.
Figures from the Office for National Statistics showed that British unemployment rate held steady in August, while jobless claims rose less-than-expected in September.
The ILO jobless rate came in at 4.9 percent in the three months ended August, unchanged from the three months to July. The figure also matched consensus estimate.
Extending early slide, the euro fell to near a 3-month low of 1.4337 against the loonie and a 16-month low of 1.4278 against the aussie. The euro is seen finding support around 1.42 against the loonie and 1.40 against the aussie.
The euro fell back to 1.5221 against the kiwi, heading to pierce its early near a 4-week low of 1.5192. The next possible downside target for the euro-kiwi pair is seen around the 1.50 area.
Looking ahead, at 9:15 am ET, U.K. Finance minister Philip Hammond is scheduled to deliver a speech in parliament, in London.
At 9:30 am ET, European Parliament's Brexit negotiator Guy Verhofstadt is expected to speak at conference on 'Future of EU budget, reform of EU institutional set-up' in Brussels.
The Bank of Canada's interest rate decision is due at 10:00 am ET .The economists expect the bank to hold rates at 0.50 percent.
Subsequently, the Bank of Canada Governor Stephen Poloz and Senior Deputy Governor Carolyn Wilkins will hold a press conference following the bank's interest rate decision and release of its monetary policy report at 11:00 am ET in Ottawa.
At 1:00 pm ET, Bank of England Chief Economist Andy Haldane is expected to speak on 'QE - The story so far' at Cass Business School, in London.
At 1:30 pm ET, European Central Bank board member Daniele Nouy is expected to speak at the European Financial Roundtable organised by Deutsche Bank in Frankfurt.
At 2:00 pm ET, Federal Reserve issues the Beige Book of economic condition in Washington.
At 4:15 pm ET, Bank of Canada Governor Stephen Poloz and Senior Deputy Governor Carolyn Wilkins will testify before the Senate Standing Committee on Banking, Trade, and Commerce, in Ottawa.
Copyright RTT News/dpa-AFX