FOREX-Dollar little changed, euro steady ahead of ECB decision

European Currency News

By Hideyuki Sano

    * Cautious risk sentiment supports dollar vs riskier
currencies
    * ECB seen trimming pace of PEPP, but pledging copious
support
    * Chinese yuan steady after jump in China PPI 
    * Brazilian real, Turkish lira suffer big losses

    By Hideyuki Sano
    TOKYO, Sept 9 (Reuters) - The dollar was supported on
Thursday as doubts over the global economy's strength subdued
risk sentiment, while the euro steadied ahead of a European
Central Bank policy meeting later in the day that is expected
result in a reduction in stimulus.
    The dollar index remained flat at 92.664, after three
 consecutive days of rises.
    And U.S. stocks to stepped back overnight from their high
valuations as investors worried about the combination of slowing
global growth, due in part to the spread of the COVID-19 Delta
variant, and the potential tapering of central bank stimulus.
           
    "One big difference versus Q4 or Q1 is that the range of
economic and inflation consequences is much wider given the
uncertainties on how COVID and inflation evolve," said Steve
Englander, head of global FX Research at Standard Chartered
Bank's New York Branch.
    "Investors may be quick to bail out of risk, if it looks
like one of these tail risks is becoming more prominent," he
added.
    The euro steadied to around $1.1819, following a
three-day retreat from Friday's two-month high of $1.1909. 
    The European Central Bank is expected to reduce stimulus on
Thursday, taking a token step towards unwinding the emergency
economic aid it put in place during the pandemic.
    Analysts polled by Reuters see ECB bond buying under its
pandemic emergency purchase programme (PEPP) falling to possibly
as low as 60 billion euros a month from the current 80 billion,
before a further fall early next year and the scheme's end in
March.
    But at the same time, the ECB is expected to signal copious
support for years to come, even after PEPP expires.
    "If the ECB board is going to discuss reducing its bond
purchase under PEPP, it will make sure that it will continue
with its conventional asset purchase programme," said Daisuke
Uno, chief strategist at Sumitomo Mitsui Bank.
    "So it is likely to be a policy change with a caveat. The
euro may end up getting little boost in the end."
    The cautious mood saw the safe-haven Swiss franc firming
slightly against other major currencies. The franc gained 0.15%
to 0.9204 per dollar.
    The yen was little moved at 110.20 yen to the dollar
while the dollar held an upper hand against riskier currencies.
    Sterling eased to $1.3763, having peaked at
$1.38905 on Friday, while the Australian dollar slipped to
$0.7357.
    The Canadian dollar changed hands at C$1.2693 per U.S.
dollar, having fallen to its lowest since Aug. 23.
    The Bank of Canada left its key interest rate at a record
low 0.25% and maintained its current quantitative easing program
on Wednesday.
    The Chinese yuan stood flat, at 6.4587 per dollar in
offshore trade, though price data showed a worsening environment
for Chinese businesses.
    China's factory gate inflation hit a 13-year high in August
despite Beijing's attempts to cool them while consumer inflation
slowed unexpectedly in a sign of soft consumption.
    A firmer dollar also pressured many emerging market
currencies, with the Brazilian real and the Turkish lira among
the worst hit.
    The real tumbled almost 3% on Wednesday to 5.3214 per dollar
 on heightened political worries as President Jair
Bolsonaro clashed with the country's Supreme Court.
    The Turkish lira weakened 1.4% to 8.468 per dollar
after central bank Governor Sahap Kavcioglu said on Wednesday
the current 19% policy rate was high enough to bring inflation
down.
    Elsewhere, Bitcoin remained shaky after Tuesday's 11% dive.
    It faces new challenges as the U.S. Securities and Exchange
Commission warned major cryptocurrency exchange operator
Coinbase that it would sue if it goes ahead with the
launch of its interest-bearing "Lend" product for crypto assets.

    The coin last stood at $46,082 while ether
changed hands at $3,474..
    
========================================================
    Currency bid prices at 0355 GMT
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
                                              Session                                           
 Euro/Dollar                  $1.1819        $1.1816     +0.03%         -3.27%      +1.1826     +1.1813
 Dollar/Yen                   110.1900       110.2100    -0.03%         +6.67%      +110.2650   +110.1100
 Euro/Yen         <EURJPY=EB  130.23         130.28      -0.04%         +2.61%      +130.3200   +130.1700
                  S>                                                                            
 Dollar/Swiss                 0.9206         0.9220      -0.17%         +4.04%      +0.9223     +0.9201
 Sterling/Dollar              1.3763         1.3771      -0.04%         +0.75%      +1.3773     +1.3760
 Dollar/Canadian              1.2701         1.2694      +0.04%         -0.27%      +1.2706     +1.2689
 Aussie/Dollar                0.7357         0.7365      -0.12%         -4.37%      +0.7369     +0.7350
 NZ                           0.7090         0.7102      -0.13%         -1.24%      +0.7102     +0.7084
 Dollar/Dollar All spots
Tokyo spots
Europe spots 
Volatilities 
Tokyo Forex market info from BOJ 



    
 (Reporting by Hideyuki Sano; Editing by Sam Holmes & Simon
Cameron-Moore)
  

Our Standards: The Thomson Reuters Trust Principles.

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