Euro treads water ahead of ECB policy meeting

Tokyo—The euro struggled to break out against the dollar and yen Thursday ahead of a European Central Bank policy decision, with disappointing German factory output fanning fears about the EU’s largest economy.
With the outlook for the eurozone still tepid, and with lingering uncertainty caused by Britain’s vote to leave the European Union, analysts warned the ECB could cut its outlook on the bloc.
“We think there is a good chance we get a downgrade to the growth and inflation outlook,” said Rodrigo Catril, a currency strategist at National Australia Bank.
“As a result, the risk is that (ECB chief Mario) Draghi may hint at an extension of the asset purchase programme which is due to end in March. “
He said such a move would be “euro negative”.
The single currency bought $1.1246 and 114.20 yen in Tokyo, against $1.1242 and 114.36 yen in New York Wednesday when it retreated on news German August industrial production slipped 1.5 percent from July.
The dollar slipped to 101.48 yen from 101.73 yen after the Federal Reserve’s Beige Book report on the economy said growth was “modest” in July and August.
The comments follow a series of below-par readings on jobs, factory activity and the services sector that have poured cold water on the chances of an interest rate hike this month, which in turn is pressuring the dollar.—APP

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