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Abu Dhabi, UAETuesday 18 September 2018

Euro slips after six months of gains as ECB eyed

 The Euro fell 0.25 per cent to $1.1881 on Friday

The President of the European Central Bank Mario Draghi leaves the Elysee presidential palace after a meeting with France's President Emmanuel Macron, in Paris, France, Thursday, Aug. 31, 2017. (Kamil Zihnioglu/Pool Photo via AP)
The President of the European Central Bank Mario Draghi leaves the Elysee presidential palace after a meeting with France's President Emmanuel Macron, in Paris, France, Thursday, Aug. 31, 2017. (Kamil Zihnioglu/Pool Photo via AP)

The euro fell on Friday after ending its sixth straight month of gains, as investors prepared for a European Central Bank meeting next week where policymakers are expected to discuss the impact of the currency’s strength.

With only 15 out of 79 analysts in the latest Reuters poll expecting the ECB to announce a timeline for its withdrawal in bond purchase plans, the market expects the currency’s strength will invite some comments from officials.

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 ECB story expressing some concern about the euro strength was to manage market expectations, but we think the impact will be temporary as the currency remains a ‘buy on dips’ story,” said Christin Tuxen, an FX strategist at Danske Bank.

The single currency slipped 0.25 per cent to $1.1881 on Friday. It rose for six consecutive months through August, briefly touching a 2-1/2 year high above $1.20 this week.

Morgan Stanley strategists said the euro is expected to remain supported against the dollar as it remains undervalued compared with its peers.

Elsewhere, the dollar stayed in familiar ranges before jobs data later in the session.

U.S. consumer spending rose slightly less than expected in July and annual inflation increased at the slowest pace since late 2015. There was also a small rise in new applications for unemployment benefits last week amid a tightening job market.

Friday’s nonfarm payrolls report is expected to show that employers added 180,000 jobs in August, according to the median estimate of 93 economists polled by Reuters.

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