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FOREX-Euro awaits ECB, Canadian, Aussie dollars languish near 2-month lows

Published 07/03/2019, 02:35 pm
Updated 07/03/2019, 02:40 pm
© Reuters.  FOREX-Euro awaits ECB, Canadian, Aussie dollars languish near 2-month lows
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* European Central Bank meeting later on Thursday in focus

* Yen, Swiss franc find shade of support amid U.S.-North Korea tension, slowdown fears

* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

By Daniel Leussink

TOKYO, March 7 (Reuters) - Major currencies mostly stuck to tight ranges on Thursday as traders focused their attention on the European Central Bank's (ECB) policy review later in the day, while the Australian and Canadian dollars struggled near two-month lows.

The yen and the Swiss franc edged up as investors sought shelter in the safe-haven assets amid signs of tension between the United States and North Korea and renewed fears of a slowdown in global growth.

The ECB is expected to cut growth forecasts and is likely to provide its strongest signal yet that stimulus is coming in the form of more cheap long-term bank loans to fight an economic slowdown. euro trod water on Thursday at $1.1307 EUR= , about 1.0 percent below a one-month high hit on Thursday last week.

"The market has already been pricing in that the economic growth in the euro zone isn't good," said Yukio Ishizuki, senior currency strategist at Daiwa Securities in Tokyo.

"Though I think there is a likelihood there may be a chance to their (ECB's) forward guidance, that also has been already priced to some extent," he said.

The OECD on Wednesday cut forecasts again for the global economy in 2019 and 2020, following on from previous downgrades in November, as it warned that trade disputes and uncertainty over Britain's exit from the European Union would hit world commerce and businesses. Australian and Canadian dollar hit their two-month lows as investors cut back holdings on expectations policymakers would leave interest rates alone for the time being or even lower them to counter weakness in those economies.

The Aussie hit a fresh two-month low of $0.70205 AUD=D4 after data showed retail sales rose 0.1 percent in January, missing expectations for a 0.3 percent increase. currency was already nursing losses from the previous day when below-par fourth-quarter economic growth figures reinforced evidence of slowing domestic momentum and backing expectations for a rate cut this year. Australian dollar was last at $0.7044.

The Bank of Canada (BoC) on Wednesday said there was "increased uncertainty" about the timing of future rate hikes as it held interest rates steady at 1.75 percent as expected. loonie fell as low as C$1.3457 CAD=D4 after the release of the BoC's latest policy statement, its lowest against the greenback since Jan. 4. On Thursday, it was a tad stronger on the day, last trading at C$1.3436.

The yen and the Swiss franc, both perceived as safe-haven currencies, found support amid signs of tension between the United States and North Korea.

New activities have been detected at a North Korean intercontinental ballistic missiles plant, South Korean media said on Thursday, as U.S. President Donald Trump said he would be very disappointed if Pyongyang rebuilt a rocket site. news that leads to buying of the yen and, in that regard, also affects the Swiss franc," said Kazushige Kaida, head of foreign exchange at State Street (NYSE:STT) Bank in Tokyo.

"But there was a move of only 5 bips or 10 bips, so it's hard to say there was a big response to this," he said.

The yen rose one tenth of a percent to 111.65 yen per dollar JPY= , while the Swiss franc was also up 0.1 percent, at 1.0043 francs per dollar CHF= .

The dollar index, which measures the greenback against a basket of six key rivals, was steady at 96.852 .DXY .

Traders have remained bullish on the dollar in view of the continuing uncertainties over Brexit and whether U.S.-China negotiations will produce a substantive trade deal.

The dollar index has gained 1.1 percent over the last six trading sessions after hitting its lowest level since early February on Thursday last week.

(Editing by Kim Coghill)

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