Euro drops most in a month as ECB stays on course

NEW YORK: The euro fell on Thursday, declining the most in a month, as the European Central Bank clung to its easy money policy and signaled no change in its timetable to move away from ultra low rates or end its bond purchase program.

Sterling, already pressured by a strong dollar, fell on the European Union's rejection of key elements of Britain's new trade proposals after it leaves the EU, known as Brexit.

ECB President Mario Draghi said at a press conference following the ECB's policy decision while he was confident regional inflation would reach the ECB's 2 percent target, rising tariffs and other trade barriers would hurt the growth of the 19-member economic bloc.

"You saw Draghi definitely taking a dovish approach," said Chuck Tomes, senior investment analyst at Manulife Asset Management in Boston. "He's focused on the current environment where he's concerned about trade."

Draghi's reticence persisted in the aftermath of a meeting between US President Donald Trump and European Commission chief Jean-Claude Juncker on Wednesday.

Trump agreed to refrain from imposing tariffs on European-made cars, while the two sides started discussions on reducing other trade barriers in a bid to avert a transatlantic trade war.

Still doubts remain on what would transpire from the talks, analysts said.

The euro was down 0.7 percent at $1.16420 and 0.5 percent lower at 129.480 yen, EBS data showed.

In addition to the euro, the greenback strengthened against other major currencies.

The US economy has continued to exhibit solid growth despite trade tensions with other countries.

Domestic core capital goods orders rose 0.6 percent in June, beating a 0.4 percent increase forecast by analysts polled by Reuters.

An index that tracks the dollar against six major currencies was up 0.4 percent at 94.765, rebounding from a two-week low reached earlier Thursday.

The pound fell 0.65 percent to $1.3109.

Meanwhile, another drop by the Chinese currency after Wednesday's bounce undermined broader risk appetite in markets.

The offshore yuan fell 0.8 percent to 6.8082 to the dollar, wiping out all of Wednesday's gain and approaching the 13-month low of 6.8200 it reached on Tuesday.

A drop of more than 6 percent in the value of the Chinese currency since mid-June as trade tensions escalated has put pressure on export-oriented emerging markets.

Investors increased bearish positions over the past two weeks on all emerging Asian currencies, according to a Reuters poll.