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Euro falls as ECB stands pat on easy policy stance
THE euro fell on Thursday as the European Central Bank (ECB) clung to its easy monetary policy and signalled no change in its timetable to move away from its ultra-low rate policy and to end its asset bond purchase programme.
ECB president Mario Draghi said at a press conference following the ECB's policy decision while confident about regional inflation achieving ECB's 2 per cent goal, rising tariffs and other trade barriers would hurt the growth of the 19-member economic bloc.
"You saw Draghi definitely taking a dovish approach," said Chuck Tomes, senior investment analyst at Manulife Asset Management in Boston. "He's focused on the current environment where he's concerned about trade." Mr Draghi's reticence persisted in the aftermath of a meeting between US President Donald Trump and European Commission chief Jean-Claude Juncker on Wednesday.
Mr Trump agreed to refrain from slapping tariffs on European-made cars, while the two sides started discussions on reducing other trade barriers in a bid to avert a transatlantic trade war.
Still, doubts remain on what would transpire from the talks, analysts said.
At 1452 GMT, the euro was down 0.6 per cent at US$1.16580 and 0.46 per cent lower at 129.525 yen, data showed.
In addition to the euro, the greenback strengthened against other major currencies.
The US economy has continued to exhibit solid growth despite trade tensions with other countries.
Domestic core capital goods orders rose 0.6 per cent in June, beating a forecast of a 0.4 per cent increase among analysts polled by Reuters.
An index that tracks the dollar versus six major currencies was up 0.3 per cent at 94.640, rebounding from a two-week low reached earlier Thursday.
Meanwhile, another drop by the Chinese currency after Wednesday's bounce undermined broader risk appetite in markets.
The offshore yuan fell 0.8 per cent at 6.8082 to the dollar, wiping out all of Wednesday's gain.
A more than 6 per cent drop in the value of the Chinese currency since mid-June as trade tensions escalated has put pressure on export-oriented emerging markets.
Investors increased bearish positions over the past two weeks on all emerging Asian currencies, according to a Reuters poll. REUTERS