CANBERA (dpa-AFX) - The euro firmed against its major counterparts in the New York session on Thursday, as European Central Bank President Christine Lagarde suggested that the central bank is nearing more closer to its inflation target and did not rule out a rate hike for this year.
In her press conference in Frankfurt, Lagarde said that inflation is likely to remain elevated for longer than previously expected and the central bank is prepared to adjust all of its instruments to ensure that inflation stabilizes at its two percent target over the medium term.
The Governing Council would remain attentive to the incoming data and carefully assess the implications for the medium-term inflation outlook, the ECB chief said.
'Compared with our expectations in December, risks to the inflation outlook are tilted to the upside, particularly in the near term.'
Economic growth should rebound strongly over the course of 2022, driven by robust domestic demand, Lagarde added.
The European Central Bank left its key interest rate and forward guidance unchanged. The main refinancing rate thus remains at zero, the deposit rate at -0.50 percent and the marginal lending rate at 0.25 percent.
The bank expects the key ECB interest rates 'to remain at their present or lower levels until it sees inflation reaching 2 percent... that realized progress in underlying inflation is sufficiently advanced to be consistent with inflation stabilizing at 2 percent over the medium term.'
The bank confirmed that it will discontinue purchasing assets under its Covid-19 pandemic stimulus scheme at the end of March.
Final survey data from IHS Markit showed that the euro area private sector eased in January as the Omicron variant of COVID-19 constrained activity, most notably across the service sector.
The composite output index dropped to 52.3 in January from 53.3 in December. The flash score was slightly below the flash 52.4.
The euro advanced to 1.1424 against the greenback for the first time since January 17. The pair was worth 1.1302 when it closed deals on Wednesday. The euro is likely to find resistance around the 1.16 level.
The euro climbed to its highest level since January 13 against the yen, at 131.22. The pair had closed Wednesday's deals at 129.35. The euro may face resistance around the 133.00 region, if it gains again.
The latest survey from Jibun Bank showed that Japan services sector dropped into contraction territory in January, with a services PMI score of 47.6.
That's down from 52.1 in December and it moves beneath the boom-or-bust line of 50 that separates expansion from contraction.
The euro strengthened to a fresh 3-week high of 1.0497 against the franc, up from Wednesday's closing value of 1.0378. The euro is seen facing resistance around the 1.06 mark.
The euro reached a 9-day high of 0.8400 against the pound, after falling to a 2-year low of 0.8284 in the previous session. The euro-pound pair had ended yesterday's trading session at 0.8324. Immediate resistance for the currency is seen around the 0.86 level.
Final data from IHS Markit showed that the recovery in UK service sector gained momentum as restrictions related to the pandemic were eased and customer demand rebounded.
The Chartered Institute of Procurement & Supply final services Purchasing Managers' Index picked up to 54.1 in January from a 10-month low of 53.6 in December. The score was also above the flash 53.3.
The euro touched nearly a 2-month high of 1.6005 against the aussie, while hitting 1.7152 against the kiwi, a level unseen since August 20, 2021. The euro had ended yesterday's deals at 1.5827 against the aussie and 1.7034 against the kiwi. Next near term resistance for the euro is likely seen around 1.74 against the aussie and 1.62 against the kiwi.
The euro approached 1.4502 against the loonie, its biggest level since December 30. The euro was trading at 1.4309 against the loonie at yesterday's close. The euro may locate resistance near the 1.46 level.
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