US dollar slips, euro rises after ECB's Draghi speaks

[NEW YORK] The US dollar fell against a basket of currencies on Thursday, while the euro gained after European Central Bank head Mario Draghi suggested it was less necessary to prop up the market through ultra-loose monetary policy.

Mr Draghi said the ECB removed a reference to using all available measures to induce growth and inflation "because the sense of urgency is not there."

The Governing Council had also discussed removing a reference to lowering interest rates in its forward guidance and had increased its inflation and growth profile for the euro zone next year, he added.

The euro rose above the US$1.06 level during Mr Draghi's remarks, reversing earlier selling that had brought it to a six-day low. It was last up 0.5 per cent at US$1.0593.

The US dollar index, which tracks the greenback against the euro and five other major world currencies, hit a session low of 101.700 as Mr Draghi spoke. It was last down 0.2 per cent at 101.880.

"The ECB raised the euro zone inflation and growth profile for 2018, and (Draghi) reduced the risks, although they still remain on the downside for growth," said Richard Cochinos, head of European G10 FX strategy at Citigroup in London.

"It's clear the market's taken it as somewhat positive (for the euro)."

The central bank did not announce any changes to its monetary policy in the statement.

The US dollar was due for a pullback, said Joseph Trevisani, chief market strategist at WorldWideMarkets in Woodcliff Lake, New Jersey.

Expectations for a US interest rate hike surpassed 90 per cent this week following Wednesday's release of a private-sector payrolls report showing employers added 298,000 jobs in February and hawkish statements from Federal Reserve officials.

Oil- and commodity-linked currencies including the Canadian, Australian and New Zealand dollars and the Norwegian crown hit multiweek lows against the dollar after a 5 per cent slump in oil prices on Wednesday.

"The Canadian dollar has been a victim of hawkish interest rate expectations in the United States, lower oil prices and a Bank of Canada that has expressed concern over the outlook for the Canadian economy," analysts from currencies exchange LMAX said in a morning note.

"Wednesday's stellar US ADP print and another big slide in oil have opened fresh 2017 lows."

Before the ECB news conference, the US dollar hit a three-week high against the yen, its fourth straight day of gains against the Japanese currency.

It was last up 0.55 per cent at 114.95 yen.

REUTERS