* Euro down another half percent after ECB moves spark 2
* Dollar bulls still point to attack on parity
* Steepening of euro zone yield curve seen to weigh on euro
* Yen falls almost 1 percent
* Graphic: World FX rates in 2016 tmsnrt.rs/2egbfVh
By Patrick Graham
LONDON, Dec 9 The euro was back under pressure
on Friday after an extension of the European Central Bank's
programme of money-printing drove its biggest daily loss against
the dollar since Britain's vote to leave the European Union in
While the ECB said it would reduce the monthly value of
purchases, they will continue until at least the end of next
year - longer than the market expected - and were accompanied
by a handful of other measures judged as negative for the single
currency going forward.
That drove a more than 2-cent fall on Thursday, and the euro
fell another half percent in morning trade in Europe, reaching
$1.0563, putting it within half a cent of this year's
lows and a cent of longer term lows at which the dollar's rally
topped out last year.
The dollar also gained almost 1 percent against the yen to
top 115 yen for the first time since February.
"Obviously we had the ECB yesterday and there is still some
momentum after that. The dollar has also risen against the yen
this morning," said Josh O'Byrne, a strategist with Citi in
"We're constructive into the end of the year. The market has
potentially more room to price higher inflation next year,
dollar rates should pick up on the back of that and that should
support the dollar."
There is debate over the nature of the slowdown of the
dollar's rally in the past 10 days.
Most major investment houses forecast the U.S. currency to
be strong next year on the back of promised measures on growth
and taxation from a Trump administration. But there is more
hesitancy about where gains will be focussed; many think betting
against the Chinese yuan or South Korean won may make more sense
than the euro.
Roger Hallam, chief investment officer for currency
management with JP Morgan Asset Management in London said he
would expect the dollar to reach $1.02-1.03 per euro although he
was not persuaded of forecasts for it to pass parity.
"We are still pretty positive on the dollar. We think Trump
will be quite supportive for growth next year... and we think
the market is underpriced for (rises in interest rates by) the
Fed," he said.
"There has been a huge amount of dollar selling in the past
week... so I don't think people are as long of the dollar as
they might like to be."
A rise in Federal Reserve interest rates next week seems
fully priced in to markets, and it may take a more bullish
signal on further rises next year from Fed chair Janet Yellen to
provoke more gains.
But U.S. interest rates are already far higher than the
equivalents in Japan and Europe and the broader economic and
policy outlook still also points in opposite directions.
The dollar index was up 0.4 percent on the day at 101.53
after a 1 percent rise on Thursday, on track to gain just
under 0.5 percent on the week.
(Editing by Toby Chopra)