NEW YORK: The US dollar slipped against the euro on Wednesday after the head of the European Central Bank said the ECB needed more time to assess whether to boost its stimulus program, confounding some who were expecting a more dovish tone.
ECB President Mario Draghi said the bank was ready to act but needed more evidence to see if the emerging market slowdown, the euro's firming and the fall in commodity prices would hijack inflation from its projected path. Draghi's comments to the European Parliament's Committee on Economic and Monetary Affairs sent the euro higher against the dollar after the shared currency earlier hit its lowest level against the greenback in two and a half weeks at $1.11050.
"(Draghi) has not added to expectations of immediate easing," said Alan Ruskin, global head of FX strategy at Deutsche Bank in New York. The US dollar had gained earlier this week on diverging monetary policy between the ECB, which many expect to deliver more stimulus, and the US Federal Reserve, which is on a path toward tightening policy.
Fed Chair Janet Yellen will speak Thursday. Draghi's comments surprised traders even after ECB Governing Council member Bostjan Jazbec said ahead of Draghi's comments that it was too early for the bank to discuss changing policy and in particular prolonging the program of asset-buying. The dollar gained against the Japanese yen, however, on the view that the Fed would still hike rates this year and that the US economy continues to out-perform other regions, said Sireen Harajli, a foreign exchange strategist at Mizuho Corporate Bank in New York.
"The dollar will continue to find some support on the view that the Fed will begin normalizing policy," Harajli said.
The move higher in the euro against the dollar also remained modest, and failed to break above Tuesday's session high of $1.12080.
The euro was last up 0.49 percent against the dollar at $1.11750.
The dollar was up 0.28 percent against the yen at 120.460 yen. The dollar was last down slightly against the Swiss franc at 0.97475 franc.
The dollar index, which measures the greenback against a basket of six major currencies, was last down 0.07 percent at 96.218. That was off an earlier two-and-a-half week high of 96.548. On Wall Street, the benchmark S&P 500 stock index was last up 0.24 percent.
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