The European Single Currency, euro drifted sideways on Friday, September 1, after posting six consecutive months of gains as investors moved to the sidelines before a European Central bank meeting next week with U.S. jobs data the key event risk in the next few hours.
Expectations of the ECB of announcing a timeline for its withdrawal of its bond purchase plans have reduced sharply to less than a fifth from over half of the total number of analysts in Reuters polls in the space of three weeks.
Nonetheless, investors will be carefully watching what ECB President Mario Draghi has to say about the euro’s strength.
“We may be getting some verbal intervention from the ECB next week but we don’t expect any major policy moves so the currency essentially remains on its long term trajectory higher for a variety of factors,” said Viraj Patel, an FX strategist at ING in London.
The ECB is highly unlikely to take any decision on trimming its asset purchases, which will be phased out only slowly as the euro’s rapid gains against the dollar are worrying a growing number of policymakers, three sources familiar with discussions told Reuters.
The single currency recouped most of its 0.25 percent earlier drop against the dollar to trade broadly flat at $1.1919.
It rose for six consecutive months through August, briefly touching a 2-1/2 year high above $1.20 this week.
Comments by ECB policymakers on Friday failed to shake the single currency out of its broad trading ranges.
The ECB will discuss how to initiate a careful withdrawal from its asset purchase programme and he would not over-interpret recent gains in the euro against the dollar, rate-setter Ewald Nowotny said on Friday.
