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FOREX-Dollar bulls count on payrolls as ECB leaves euro underwhelmed

Published 03/06/2016, 10:00 am
Updated 03/06/2016, 10:10 am
© Reuters.  FOREX-Dollar bulls count on payrolls as ECB leaves euro underwhelmed
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* Euro broadly softer, dollar awaits jobs report

* ECB leaves policy mix pretty much unchanged

* OPEC fails to agree a clear oil-output strategy

By Ian Chua

SYDNEY, June 3 (Reuters) - The euro wallowed near a three-year low against the yen early on Friday, having been underwhelmed by the European Central Bank holding back from making material changes to its policy mix after a review.

The euro's decline kept the dollar index near a two-month peak, leaving it poised for a breakthrough should non-farm payrolls due later in the day bolster expectations for an imminent hike in U.S. rates.

The euro stood at 121.40 yen EURJPY=R , having been as low as 121.065 - a level not seen since April 2013. Against the dollar, it dipped back near $1.1150 EUR= after losing grip of the overnight high of $1.1221.

"The euro came under downside pressure largely because participants were expecting the ECB to make a greater upward revision to their long-term inflation forecast, particularly following the rebound in crude oil prices," said Elias Haddad, FX strategist at Commonwealth Bank.

"The lack of a lift in the ECB's inflation forecasts leaves the door open to more aggressive easing measure by the ECB which will weigh on the euro."

The ECB nudged up its 2016 inflation forecast to a mere 0.2 percent, from 0.1 percent, still far below its target of nearly 2.0 percent.

The bank kept rates unchanged, deep in negative territory, and President Mario Draghi warned the risks to the euro area growth outlook remain tilted to the downside. closely watched event that failed to generate much excitement was a meeting of oil producing nations, which again was unable to agree on a clear oil-output strategy as Iran insisted on steeply raising its own production. that track oil prices were left floundering. The Canadian dollar last traded at C$1.3100 per USD CAD=D4 , having touched a one-week low of C$1.3144.

With little on offer out of Asia and Europe on Friday, investors will take their cue from non-farm payrolls. Market consensus is for the U.S. economy to have created 164,000 jobs in May, little changed from April. ECONUS

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