Reuters: US Dollar Report: FOREX-Euro thrives as ECB's Draghi stays course; dollar struggles

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FOREX-Euro thrives as ECB's Draghi stays course; dollar struggles Oct 2nd 2013, 14:05 Wed Oct 2, 2013 10:05am EDT * ECB's Draghi comments buoy euro * ECB keeps rates unchanged * Weak U.S. private payrolls sector jobs data weighs on dollar * Dollar under pressure given U.S. political deadlock By Julie Haviv NEW YORK, Oct 2 (Reuters) - European Central Bank President Mario Draghi provided a firm boost to the euro on Wednesday by sticking to the ECB's current stance on monetary policy yet conveying that it is prepared to do more should it be warranted. The European Central Bank left interest rates unchanged, holding off any fresh policy action for now while it waits to see whether a fragile euro zone recovery strengthens. Draghi's overall assessment of the economy remained largely the same as the previous month's meeting. He also did not express concern about the euro's appreciation recently and left the door open to pumping more ultra-cheap loans into the market. "The exchange rate is not a policy target for the ECB. The target for the ECB is medium-term price stability," Draghi said. The euro rallied to its highest since February against the dollar, reaching a peak of $1.3606. It last traded at $1.3596, up 0.5 percent on the day. "The euro's rally has more to do with what Draghi did not say than what he did say," said Camilla Sutton, chief currency strategist at Scotiabank in Toronto. "There was not much change to his stance and it removed the uncertainty headed into the meeting that he would sound more dovish," she said. The ECB kept its main refinancing and deposit rates on hold as was widely expected. The euro earlier found support on growing signs Italian Prime Minister Enrico Letta will survive a confidence vote later on Wednesday. Italian centre-right leader Silvio Berlusconi backtracked from his attempts to bring down the government and told the Senate his party would support Letta. DOLLAR STRUGGLES The dollar index, which tracks the greenback against a basket of six major currencies, fell as low as 79.781, its lowest since February. It last traded 0.4 percent lower at 79.826. The euro dominates the composition of the index. The dollar remained subdued as the ongoing political wrangling in the U.S., which has led to a partial government shutdown, showed no signs of a resolution. President Barack Obama on Wednesday scrapped part of a long-planned trip to Asia and left the remainder of the trip in doubt as a U.S. government shutdown went into a second day with no end in sight to the funding battle in Congress that triggered it. In early North American trade the dollar was weighed by weaker-than-expected labor market data. The U.S. private sector added 166,000 jobs in September, according to ADP. The greenback was down 0.7 percent at 97.28 yen. It earlier slid 97.22 yen, its lowest since late-August. The yen, which tends to benefit in times of market turmoil, also rose against the euro. The single currency pared losses after the ECB's Draghi's comments, last trading down 0.2 percent at 132.24, according to Reuters data. Link this Share this Digg this Email Reprints

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