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Euro craters to mid-2017 lows as ECB restarts stimulus

Published 2019-03-07, 04:14 p/m
Updated 2019-03-07, 04:20 p/m
Euro craters to mid-2017 lows as ECB restarts stimulus

Euro craters to mid-2017 lows as ECB restarts stimulus

* ECB delays rate hike, readies to lend more to banks

* Latest ECB move knocks neighboring European currencies

* Dollar index rallies to highest since December

* Canadian, Aussie dollar hover at two-month lows

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

By Richard Leong

NEW YORK, March 7 (Reuters) - The euro tumbled on Thursday to its lowest against the dollar since June 2017 after the European Central Bank postponed the timing of its first post-crisis rate hike to 2020 at the earliest and launched a new round of cheap loans to banks.

The single currency suffered its worst day versus the greenback since the ECB previously delayed its rate-hike plan almost nine months ago.

The ECB's decision to tweak its forward guidance on rates was a surprise for many investors. The central bank also cut its growth and inflation forecasts through 2021. ECB has no choice," said Joseph Trevisani, senior analyst at FX Street in New York. "There are a lot of internal problems which are impediments to growth."

Anemic domestic demand and political tensions will unlikely be resolved by an easy ECB policy stance and would keep downward pressure on the euro, analysts said.

Currencies of European countries not part of the euro zone, such as the Swedish crown and Hungarian forint, fell hard after the ECB's decision, which is aimed at battling deteriorating regional business and consumer activities, analysts said.

On the other hand, the greenback reached a new 2019 high against a basket of currencies that includes the euro as traders bet the United States would fare better than Europe in the coming months despite some soft patches in the U.S. economy.

The euro EUR=EBS sagged to $1.11765, its lowest level since mid-2017. It was last 1.12 percent lower at $1.1181 in late U.S. trading.

The single currency recorded its biggest one-day loss against the greenback since June 14, 2018 when the ECB pushed back plans for a rate hike into the summer of 2019. euro is at risk of falling to $1.10 in the coming weeks, analysts said.

The Swedish crown SEK=D3 fell to its weakest since Dec. 15, 2016 at 9.476 per dollar. It was down 0.66 percent at 10.586 per euro, Reuters data showed.

The Hungarian forint HUF= shed 1.38 percent against the dollar and slipped 0.2 percent against the euro HUREUR=R .

The ICE (NYSE:ICE) index that tracks the dollar against a basket of six major currencies .DXY was up 0.84 percent at 97.685 after touching 97.71, which was its highest since Dec. 17.

"I don't think you will get much more on the upside," Aaron Hurd, senior portfolio manager in the currency group at SSGA in Boston, said of the greenback. "It will likely stay in a range."

Among other G10 currencies, the Canadian and Australian dollars hovered at two-month lows after investors bet their central banks would ease monetary policy as their economies slow.

The Aussie AUD=D4 was down 0.33 percent at $0.70085, while the loonie CAD=D4 was down 0.16 percent at C$1.3464. ========================================================

Currency bid prices at 4:02PM (2102 GMT) Description

RIC

Last

U.S. Close Pct Change

YTD Pct

High Bid

Low Bid

Previous

Change

Session

Euro/Dollar

EUR=

$1.1181

$1.1305

-1.10%

-2.51%

+1.1321

+1.1177 Dollar/Yen

JPY=

111.6100

111.7500

-0.13%

+1.22%

+111.8500 +111.4900 Euro/Yen

EURJPY=

124.79

126.35

-1.23%

-1.13%

+126.4300 +124.6800 Dollar/Swiss

CHF=

1.0119

1.0048

+0.71%

+3.11%

+1.0124

+1.0036 Sterling/Dollar GBP=

1.3071

1.3169

-0.74%

+2.46%

+1.3185

+1.3070 Dollar/Canadian CAD=

1.3458

1.3440

+0.13%

-1.31%

+1.3469

+1.3413 Australian/Doll AUD=

0.7008

0.7032

-0.34%

-0.58%

+0.7051

+0.7005 ar

Euro/Swiss

EURCHF=

1.1316

1.1364

-0.42%

+0.55%

+1.1368

+1.1315 Euro/Sterling

EURGBP=

0.8552

0.8583

-0.36%

-4.81%

+0.8625

+0.8538 NZ

NZD=

0.6747

0.6767

-0.30%

+0.45%

+0.6791

+0.6746 Dollar/Dollar

Dollar/Norway

NOK=

8.7903

8.6634

+1.46%

+1.75%

+8.7998

+8.6563 Euro/Norway

EURNOK=

9.8299

9.7968

+0.34%

-0.77%

+9.8421

+9.7828 Dollar/Sweden

SEK=

9.4655

9.2986

+0.64%

+5.60%

+9.4762

+9.2886 Euro/Sweden

EURSEK=

10.5840

10.5162

+0.64%

+3.12%

+10.6010

+10.5059

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ GRAPHIC-Euro vs dollar

https://tmsnrt.rs/2C8AXF1 GRAPHIC-Reuters Poll: Euro zone recession probability

https://tmsnrt.rs/2EEAnk1 GRAPHIC-Reuters Poll: Euro zone recession probability interactive

https://tmsnrt.rs/2EBxwIh GRAPHIC-Reuters poll: U.S. dollar rally now stalled?

https://tmsnrt.rs/2t7YAbV GRAPHIC-Reuters poll: U.S. dollar rally now stalled? interactive

https://tmsnrt.rs/2t5uHcb GRAPHIC-ECB mulls fresh cheap loan package to boost euro zone economy

https://tmsnrt.rs/2BXmtI1

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

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