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

Reuters

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

 (Updates market action, adds analyst quote)
    By Richard Leong
    NEW YORK, June 14 (Reuters) - The euro tumbled 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 through the end of this year.
    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 tensions, 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.  urn:newsml:reuters.com:*:nL8N1TG0UZ
    That stance contrasts with the steady rate hike campaign
that the U.S. Federal Reserve signaled on Wednesday.
 urn:newsml:reuters.com:*:nTLADHEE2K
    The ECB's willingness to preserve its easy-money policy as
part of an effort to boost the euro zone 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 in Santa Clara, California. 
    At 1:17 p.m. (1717 GMT), the euro  EUR=  was down nearly 1.4
percent at $1.1628 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 128.44 yen  EURJPY=  for its biggest one-day fall in
more than two weeks.
    Investors now price only a 30 percent chance of a rate hike
of 10 basis points by July 2019, compared with a roughly 80
percent chance earlier in the day.  ECBWATCH  
    The U.S. central bank, however, is expected to raise
short-term interest rates two more times in 2018 and likely to
lift them three times in 2019, according to a Reuters poll.
 urn:newsml:reuters.com:*:nL1N1TF2AA
    The Fed, as expected, raised rates by a quarter of a
percentage point to a range of between 1.75 and 2.00 percent on
Wednesday, citing a solid U.S. economy and labor market.
    "The two meetings highlight the vast divergence between the
two central banks," said John Sidawi, who manages Federated
Investors' Global Total Return Bond Fund in Pittsburgh.
    Earlier on Thursday, the government said domestic retail
sales grew 0.6 percent in May, more than analysts' expectations
and the biggest gain in six months.  urn:newsml:reuters.com:*:nL1N1TF1ZT
    While the Fed and ECB provided much of the week's central
bank fireworks, the Bank of Japan began a two-day policy meeting
with virtually no one forecasting changes to its stimulative
policy given recent signs of slowing growth.  urn:newsml:reuters.com:*:nL4N1TE2J5
    "I don't expect anything out of the BOJ," Federated's Sidawi
said.
========================================================
    Currency bid prices at 1:21PM (1721 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
                                              Session                                           
 Euro/Dollar      EUR=        $1.1629        $1.1789     -1.36%         -3.06%      +1.1851     +1.1618
 Dollar/Yen       JPY=        110.4700       110.3200    +0.14%         -1.95%      +110.4900   +109.9200
 Euro/Yen         EURJPY=     128.48         130.09      -1.24%         -4.96%      +130.3400   +128.3200
 Dollar/Swiss     CHF=        0.9946         0.9855      +0.92%         +2.08%      +0.9949     +0.9826
 Sterling/Dollar  GBP=        1.3308         1.3374      -0.49%         -1.51%      +1.3446     +1.3285
 Dollar/Canadian  CAD=        1.3079         1.2984      +0.73%         +3.99%      +1.3084     +1.2950
 Australian/Doll  AUD=        0.7497         0.7576      -1.04%         -3.90%      +0.7582     +0.7498
 ar                                                                                             
 Euro/Swiss       EURCHF=     1.1568         1.1617      -0.42%         -1.04%      +1.1648     +1.1558
 Euro/Sterling    EURGBP=     0.8738         0.8814      -0.86%         -1.63%      +0.8821     +0.8724
 NZ Dollar/Dolar  NZD=        0.6984         0.7023      -0.56%         -1.44%      +0.7044     +0.6986
 Dollar/Norway    NOK=        8.0995         8.0077      +1.15%         -1.31%      +8.1025     +7.9790
 Euro/Norway      EURNOK=     9.4202         9.4446      -0.26%         -4.35%      +9.4691     +9.3993
 Dollar/Sweden    SEK=        8.6934         8.6060      -0.37%         +6.00%      +8.7261     +8.5800
 Euro/Sweden      EURSEK=     10.1108        10.1479     -0.37%         +2.76%      +10.1925    +10.0989
 
    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
World FX rates in 2018    http://tmsnrt.rs/2egbfVh
ECB bond buys vs inflation    https://reut.rs/2M7eKKV
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
 (Additional reporting by Tommy Wilkes, Dhara Ranasinghe and
Saikat Chatterjee in LONDON;
Editing by Dan Grebler and Paul Simao)
 ((richard.leong@thomsonreuters.com; +1 646 223 6313; Reuters
Messaging: richard.leong.thomsonreuters.com@thomsonreuters.net;
Twitter @RichardLeong2))

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