April 10, 2019 / 12:54 AM / 2 months ago

Euro, dollar little changed as Fed, ECB signal patience

NEW YORK (Reuters) - The dollar and euro were little changed on Wednesday as the Federal Reserve and the European Central Bank hinted they are willing to leave interest rates alone amid signs of flagging growth and risk from trade tensions.

A money changer counts Euro banknotes at a currency exchange office in Nice, France November 17, 2017. REUTERS/Eric Gaillard

Among major currencies, the Norwegian crown was the day’s biggest gainer following stronger-than-expected inflation data that raised expectations of another interest rate hike from the central bank in the coming months.

The Fed on Wednesday released the minutes on its March 19-20 meeting at which policy-makers signaled they would not raise rates in 2019 and they would stop shrinkage of its bond holdings by September.

“It supports the Fed on its patient path,” Cliff Corso, executive chairman of Insight Investment in New York, said of the Fed minutes.

Earlier, President Mario Draghi underscored the risks facing the euro zone economy, reinforcing bets on possible further stimulus to prevent the region from slipping into recession. He was speaking at a press conference after a meeting where policy-makers left their easy policy unchanged.

He also cited the risks from trade disputes to regional business activity after U.S. President Donald Trump threatened to impose tariffs on $11 billion worth of European Union goods.

“Given their significant slowdown, the ECB is going to be on hold for a long time,” Corso said.

In late U.S. trading, the euro was up 0.09% at $1.1272 but was 0.09% lower at 125.085 yen.

The greenback was bolstered earlier Wednesday by the latest reading of the U.S. consumer price index.

The U.S. government’s broadest inflation gauge rose 0.4% in March, the biggest monthly increase since January 2018, while the CPI core rate, which excludes volatile food and energy prices, edged up 0.1%, falling short of the 0.2% gain forecast by analysts polled by Reuters.

The somewhat mixed CPI report soothed worries about price growth fading, but did not dispel the view the Federal Reserve may lower key U.S. interest rates by early 2020, analysts said.

An index that tracks the greenback against a basket of currency was down 0.08% at 96.933.

The dollar weakened to 2-1/2 week lows against the Norwegian crown, last down 0.72% at 8.4956.

The euro fell to a near five-month low at 9.5768 crown.

Norway’s currency rose after the domestic core CPI for March came in at 2.7%, beating market expectations of a 2.5% increase.

Just behind the crown was the Australian dollar which gained 0.61% at $0.71665 after touching the highest levels in six weeks. Graphic: REER valuations, click tmsnrt.rs/2D48yAs Graphic: World FX rates in 2019, click tmsnrt.rs/2egbfVh

Reporting by Richard Leong in New York; Additional reporting by Saikat Chatterjee in LONDON and Daniel Leussink in TOKYO; Editing by Catherine Evans and James Dalgleish

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