FOREX-Euro gains on report of ECB wariness about further easing

Thu Jan 14, 2016 6:25am EST
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* Canadian dollar on defensive as oil prices fall further

* Euro firms on Reuters report ECB wary of more action

* Sterling awaits BOE's first policy review of 2016

By Jemima Kelly

LONDON, Jan 14 (Reuters) - The euro gained around half a percent against the dollar on Thursday after Reuters reported that European Central Bank policy makers are sceptical about the need for further policy action in the near term.

Oil-rich Canada's dollar fell to its lowest level since April 2003 with a further slide in crude prices expected to undermine the Canadian economy, fuelling speculation that the Bank of Canada could cut interest rates as early as next week.

The ECB also meets next week with the session expected to be relatively uneventful, with the big test coming when the ECB releases its initial 2018 growth and inflation forecasts on March 10.

But some of the five central bankers who spoke to Reuters said that even if these forecasts were to be revised downward, the ECB should not respond immediately.

Rate-setters remain wary about further action, even if that requires them to temporarily turn a blind eye to the impact of falling oil prices or the fact that inflation has been below the ECB target for three years.   Continued...