Euro inches up ahead of Trump-Juncker talks

London

Lack of clarity over where a brewing US-European trade conflict is heading kept most major currencies, including the dollar, range-bound on Wednesday as Mr Juncker travelled to Washington for trade-focused talks with Mr Trump.

The talks come after the United States imposed tariffs on European Union steel and aluminium, and Mr Trump's threats to extend those measures to EU-made cars.

"Risks remain tilted to the continuation of the tough rhetoric by the US president," said Chris Turner, head of currency strategy at ING in London.

"Given that the risk of auto tariffs is a well-known threat, any major breakthrough today may not be enough to materially affect risk appetite. We look for the FX markets to remain stable today." The single currency was up 0.1 per cent at US$1.1694. The dollar versus a basket of major currencies traded broadly flat at 94.52.

Some are puzzled at how little the impending US tariffs have budged the euro in recent weeks.

"The euro continues to stagnate in a sideways range despite the risk of a trade war becoming increasingly obvious," said Commerzbank currency strategist Ulrich Leuchtmann in Frankfurt.

"But FX markets cannot ignore economic realities for long ... The next trend will come."

Mr Trump reinforced his criticism last week of the Federal Reserve's policy on raising interest rates, saying it could hurt the US economy.

He also accused the EU and China of manipulating their currencies, ignoring a custom that US presidents avoid openly interfering in financial markets.

"Short-term traders had to take notice of Trump's comments but other countries did not take the bait. The dollar is fairly stable. There is no currency war," Marc Chandler, global head of currency strategy at Brown Brothers Harriman in New York, said in a note.

Investors were also eyeing a European Central Bank (ECB) policy meeting on Thursday for direction. The ECB guided markets for steady rates through the summer of 2019 at a meeting last month, when it also announced it would shut its signatory bond-purchasing programme in December. REUTERS