(Recasts, adds comment, updates prices, changes byline,
dateline; previous LONDON)
* Euro initially firms on report ECB wary of more action
* Canadian dollar falls sharply
By Gertrude Chavez-Dreyfuss
NEW YORK, Jan 14 (Reuters) - The dollar rose on Thursday,
bolstered by gains in the U.S. stock market and a rebound in oil
prices, suggesting that the Federal Reserve will not be as
constrained to push ahead with its plan to raise interest rates
several times this year.
Oil prices have been volatile the first two weeks of the
year, but on Thursday, U.S. crude futures were up 3.8 percent at
$31.63 CLc1 . That has supported shares on Wall Street, with
key indexes up more than 1 percent on the day.
In the currency market, that means gains for the dollar and
losses for the safe-haven yen and low-yielding euro.
"The big picture is really about risk," said Lee Ferridge,
head of macro strategy for North America at State Street in
Boston.
"In time of risk aversion, we have seen high-beta currencies
such as the South African rand, the New Zealand and Australian
dollars. That has led to flows into the yen."
Both the safe-haven yen and the low-yielding euro tend to
gain in times of market anxiety because these currencies are
often used to fund investment in risky assets. They consequently
rise back up when there is a retreat from those assets.
The euro had earlier benefited from a Reuters report saying
that European Central Bank policy makers see less need for
further stimulus in the near term.
On Thursday, Reuters reported that many ECB policy makers
are skeptical about the need for further policy action and even
if the bank comes out with lower inflation and growth forecasts
for 2018 in March, it should not act immediately.
ID:nL8N14X14M
"In a sense, that's understandable," said Ferridge. "Euro
zone data is doing pretty well. Growth is not so bad. And given
the negative rates and money-printing now until 2017, there
really is no need for further stimulus at the moment."
In late morning trading, the euro fell 0.3 percent against
the dollar at $1.0838 EUR= . It was flat versus the yen at
128.03 yen EURJPY= . The dollar rose 0.3 percent against the
yen to 117.99 yen JPY= .
The ECB also holds a policy meeting next week with the
session expected to be relatively uneventful. The big test comes
when the ECB releases its initial 2018 growth and inflation
forecasts on March 10.
Oil-rich Canada's dollar fell, meanwhile, to its lowest
since April 2003 with a further slide in crude prices expected
to undermine the Canadian economy. That fueled that the Bank of
Canada could cut rates as early as next week.
The U.S. dollar was last flat on the day at C$1.4352 CAD= .