June 14, 2018 / 3:28 PM / 5 months ago

FOREX-Euro tumbles as ECB stands pat on rates into 2019

    * ECB extends bond purchase program to December
    * Euro on track for biggest daily drop vs dollar since
October
    * Fed seen raising U.S. rates twice more in 2018 -Reuters
poll

 (Updates market action, changes dateline; previous LONDON)
    By Richard Leong
    NEW YORK, June 14 (Reuters) - The euro fell broadly on
Thursday as the European Central Bank planned to keep interest
rates at record lows into the summer of 2019 and extended its
massive bond purchase program into year-end.
    The ECB's move to protract monetary stimulus came amid
jitters about slowing growth in the euro zone, political turmoil
in Italy and global trade tension, analysts said.
    "We didn't discuss when to raise rates," ECB President Mario
Draghi said at a press conference following the central bank's
policy meeting.
    This stance contrasts with the steady rate-hike campaign
that the Federal Reserve signaled on Wednesday.
    The ECB's willingness to preserve easy money to help its
economy soured bullish bets on the single currency and caused
traders to pile into the dollar and yen. 
    "The market was caught wrong-footed as the rates would be on
 hold into mid-2019," said Peter Ng, senior currency trader at
Silicon Valley Bank at Santa Clara, California. 
    At 11:08 a.m. (1508 GMT), the euro shed 1.2 percent
at $1.1645 after briefly posting its steepest daily drop against
the dollar in nearly two years.
    Against the Japanese yen, the single currency slid 1.3
percent to 128.45 yen for its biggest one-day fall in
over two weeks.
    Investors now price just a 30 percent chance of a 10 basis
point rate hike by July 2019, compared with a roughly 80 percent
chance earlier in the day. 
    On the other hand, the U.S. central bank is expected to
raise short-term interest rates twice more in 2018 and likely to
lift them three times in 2019, according to a Reuters poll.

    On Wednesday, the Fed, as expected, raised short-term rates
by a quarter point to a range of between 1.75 and 2.00 percent.
    "There's obviously a divergence where rates are heading," Ng
said. "This makes the dollar a lot more attractive to global
investors."
========================================================
    Currency bid prices at 11:09AM (1509 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
                                              Session                                           
 Euro/Dollar      EUR=        $1.1649        $1.1789     -1.19%         +0.00%      +1.1851     +1.1619
 Dollar/Yen       JPY=        110.2800       110.3200    -0.04%         +0.00%      +110.4400   +109.9200
 Euro/Yen         EURJPY=     128.47         130.09      -1.25%         +0.00%      +130.3400   +128.3500
 Dollar/Swiss     CHF=        0.9925         0.9855      +0.71%         +0.00%      +0.9948     +0.9826
 Sterling/Dollar  GBP=        1.3333         1.3374      -0.31%         +0.00%      +1.3446     +1.3305
 Dollar/Canadian  CAD=        1.3030         1.2984      +0.35%         +0.00%      +1.3041     +1.2950
 Australian/Doll  AUD=        0.7533         0.7576      -0.57%         +0.00%      +0.7582     +0.7528
 ar                                                                                             
 Euro/Swiss       EURCHF=     1.1563         1.1617      -0.46%         +0.00%      +1.1648     +1.1558
 Euro/Sterling    EURGBP=     0.8735         0.8814      -0.90%         +0.00%      +0.8821     +0.8731
 NZ Dollar/Dolar  NZD=        0.7015         0.7023      -0.11%         +0.00%      +0.7044     +0.7011
 Dollar/Norway    NOK=        8.0765         8.0077      +0.86%         +0.00%      +8.0949     +7.9790
 Euro/Norway      EURNOK=     9.4130         9.4446      -0.33%         +0.00%      +9.4691     +9.3993
 Dollar/Sweden    SEK=        8.6746         8.6060      -0.41%         +0.00%      +8.7261     +8.5800
 Euro/Sweden      EURSEK=     10.1067        10.1479     -0.41%         +0.00%      +10.1925    +10.0989
    

    
 (Additional reporting by Tommy Wilkes, Dhara Ranasinghe and
Saikat Chatterjee in LONDON;
Editing by Susan Fenton and Dan Grebler)
  
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