Euro Pares Losses Despite ECB Reports, Eurozone Data

The euro is trading higher at the end of the Friday trading session, paring earlier losses that sent the currency lower by as much as 0.3%. The euro took a hit when it was reported the central bank might be considering long-term bank loans, and it is still reeling from the disappointing economic data.

According to several reports, the heads of the European Central Bank (ECB) is thinking about another long-term refinancing operation (LTRO) aimed that supporting continental financial institutions. The LTRO was first launched in 2011 as a way to extend cheap loans to local banks in the aftermath of the debt crisis, which was mostly taken advantage of by Italian and Spanish banks.
Considering that Italy is facing another debt crisis and is entering into a fierce battle with the European Commission regarding its 2019 budget proposal, analysts think that officials could utilize the LTRO.
Earlier this week, Eurostat reported that economic growth slumped to a disappointing 0.2% in the third quarter, the slowest pace since early 2014. Italy’s growth was flat, France posted a 0.4% boost, and Germany is not expected to announce its gross domestic product (GDP) figures until later this month – the Bundesbank already warned that growth will likely stall during the July-to-September period.
Investors were further disappointed when IHS Markit’s October final manufacturing Purchasing Managers’ Index tumbled from 53.2 in September to 52 in October – anything above 50 indicates growth. This is the weakest monthly pace in more than two years. Export orders also declined in October for the first time since the end of 2014.
The euro was able to record a late rally when traders ended their month-end buying of US dollars, supporting the euro, as well as a couple of other currencies.
The EUR/USD currency pair fell 0.13% to 1.1396, from an opening of 1.1410, at 19:17 GMT on Friday. The EUR/CNY slipped 0.6% to 7.8518, from an opening of 7.8999.

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