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FOREX-Dollar stands tall, euro on defensive after ECB offers few surprises

Published 27/07/2018, 10:36 am
© Reuters.  FOREX-Dollar stands tall, euro on defensive after ECB offers few surprises
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* Euro hit overnight after ECB stays on policy course

* Dollar index steady after pulling back from 2-week low

* Fundamentals seen supporting dollar, US yields near 6-wk high

By Shinichi Saoshiro

TOKYO, July 27 (Reuters) - The dollar was firm against its peers on Friday, having regained traction as the euro slid sharply after the European Central Bank kept to its planned timetable to move away from its accommodative monetary policy.

The dollar index, which measures the greenback's strength against a basket of six major currencies, stood little changed at 94.743 .DXY . It had risen 0.4 percent overnight to pull away from a two-week low of 94.084.

The euro was virtually flat at $1.1643 EUR= .

The single currency had sunk more than 0.7 percent the previous day after the ECB said it would stay on course to end its 2.6 trillion euro stimulus programme this year and keep rates at a record low level through the summer of 2019. the euro's downturn provided the dollar with a significant lift, the U.S. currency was seen to be enjoying support from other quarters as well.

"The dollar is higher across the board and this reflects the lift it is enjoying from fundamental factors, notably higher U.S. yields and higher Wall Street shares amid improving risk appetite," said Junichi Ishikawa, senior FX strategist at IG Securities in Tokyo.

"The dollar will remain caught between the lift from such fundamental factors and downward pressure from political factors, such as President Trump's attempts to keep dollar strength in check."

The 10-year U.S. Treasury note yield US10YT=RR hovered near a six-week high of 2.984 percent scaled overnight as traders braced for a potentially strong reading of U.S. gross domestic product data, set for release later on Friday.

The U.S. currency was 0.05 percent higher at 111.15 yen JPY= .

The dollar was slightly lower against the yen for the week, during which it pulled away from a six-month high above 113 yen scaled on July 19.

The dollar's retreat came after U.S. President Donald Trump expressed displeasure over the currency's strength and amid speculation that the Bank of Japan could scaled back its massive monetary stimulus soon.

The pound was 0.05 percent lower at $1.3104 GBP=D3 . It had dropped 0.6 percent overnight as a stronger dollar and mounting uncertainty over Brexit negotiations offset the positive impact of bets on a Bank of England interest rate hike next week. GBP/

The Australian dollar AUD=D3 was a shade higher at $0.7381. The Aussie, often seen as a liquid proxy of China-related trades, had fallen 1 percent the previous day amid a drop in Chinese equities.

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