Euro Weakens As Report Shows ECB To Extend QE Into 2018

The euro declined against its major counterparts in the European session on Friday, after media reports showed that the European Central Bank is likely to extend its asset purchase program into next year, while reducing monthly purchases to 30 billion euros.

The ECB officials are considering to trim their monthly bond buying to 30 billion euros from January and extend the program to September, according to Bloomberg.

The central bank currently purchases bonds worth €60 billion per month.

The ECB meets on October 26, when it plans to unveil details about winding down its bond-buying program.

Investors awaited the U.S. inflation and retail sales reports later in the day for more clues about monetary policy.

Final data from Destatis showed that Germany's inflation held steady, as initially estimated, in September.

Consumer prices advanced 1.8 percent year-on-year in September, the same rate as seen in August. The rate also matched the estimate published on September 28.

The inflation rate was the highest since April, when it was 2 percent.

The currency showed mixed performance in the Asian session. While it rose against the greenback and the franc, it held steady against the yen and the pound.

The euro dropped to a 4-day low of 132.21 against the Japanese yen, compared to Thursday's closing value of 132.81. If the euro-yen pair extends decline, 131.00 is possibly seen as its next support level.

Data from the Bank of Japan showed that Japan's M2 money stock rose 4.1 percent on year in September, coming in at 979.3 trillion yen.

That beat forecasts for an increase of 4.0 percent, which would have been unchanged from the August reading.

The euro reversed from an early high of 1.1851 against the greenback, falling to a 2-day low of 1.1815. On the downside, 1.17 is likely seen as the next support for the euro-greenback pair.

The single currency that finished yesterday's trading at 1.1539 against the franc declined to a 2-day low of 1.1524. The next possible support for the euro-franc pair is seen around the 1.14 mark.

Data from the Federal Statistical Office showed that Switzerland's producer and import prices climbed more than expected in September.

Producer and import prices advanced 0.8 percent year-on-year in September, faster than the expected growth of 0.6 percent.

The 19-nation currency slid to an 8-day low of 0.8876 against the pound, compared to 0.8915 hit late New York Thursday. The euro is seen finding support around the 0.87 region.

The euro weakened to a 4-day low of 1.4723 against the loonie, weekly lows of 1.5075 against the aussie and 1.6537 against the kiwi, from Thursday's closing values of 1.4757, 1.5124 and 1.6591, respectively. Continuation of the euro's downtrend may see it challenging support around 1.46 against the loonie, 1.49 against the aussie and 1.64 against the kiwi.

Looking ahead, U.S. CPI and retail sales for September, business inventories for August and University of Michigan's preliminary consumer sentiment index for October are set for release in the New York session.

At 10:25 am ET, Federal Reserve Bank of Chicago President Charles Evans speak about the economy and monetary policy at the Wisconsin Summit on Financial Literacy.

At 11:30 am ET, Federal Reserve Bank of Dallas President Robert Kaplan speaks about the economy and monetary policy at the Chartered Financial Analyst Institute, in Boston.