July 21, 2017 / 12:51 AM / a year ago

FOREX-Dollar near two-year lows vs euro after Draghi comments

* ECB’s Draghi says bank will discuss bond-buying plan in autumn

* Dollar index close to lowest since August 2016

* BOJ holds steady, mitigating dollar’s losses vs yen

By Lisa Twaronite

TOKYO, July 21 (Reuters) - The dollar headed for weekly losses on Friday, wallowing at its lowest levels against the euro in nearly two years after European Central Bank chief Mario Draghi said policymakers would discuss changing its bond-buying programme in the autumn.

The dollar index, which tracks the greenback against a basket of six major rivals, was flat on the day at 94.316, not far from its overnight low of 94.090, its deepest nadir since August 2016. It was down 0.8 percent for the week.

The euro caught its breath at $1.1625 after climbing as high as $1.1659 on Thursday, its loftiest peak since August 2015.

Draghi said that no exact date had been set for discussing any changes to the ECB’s ultra-easy monetary programme but did specify the season.

His comments were perceived as “hawkish, even though the ECB didn’t tip its hand as to when it will begin balance sheet normalisation and in fact left the door open to additional easing if needed,” said Bill Northey, chief investment officer at U.S. Bank Private Client Group in Helena, Montana.

The dollar was nearly flat on the day against the yen at 111.92, after touching an overnight low of 111.48, its lowest since June 27. It was on track to shed 0.5 percent for the week.

The euro was also nearly flat against its Japanese counterpart at 130.13 yen after rising to 130.26 on Thursday, within sight of last week’s high of 130.76 yen, its highest since February. It was on track to gain 0.8 percent for the week.

The dollar’s losses against the yen were mitigated by market expectations that the Bank of Japan will lag well behind other major central banks in scaling back its massive stimulus programme.

On Thursday, the BOJ kept monetary policy steady as expected and delayed the timing to achieve its ambitious inflation target, though it slightly raised its growth forecasts.

Concerns over low inflation will likely keep the Federal Reserve from raising U.S. rates at its policy meeting next week, analysts said.

Fed Chair Janet Yellen signalled caution in her congressional testimony last week, with disappointing U.S. inflation and retail sales data a week ago adding to evidence that the central bank has reason to take its time in tightening.

U.S. President Donald Trump’s failure to garner enough support for his healthcare bills in the Senate this week also weighed on the dollar, as it raised fears about the likelihood of passing his stimulus and tax reform agendas. (Reporting by Lisa Twaronite; Editing by Sam Holmes)

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