(Adds more comment, Canadian dollar move)
* Euro jumps for second day after shift in language from ECB chief
* Deutsche Bank abandons call for weaker euro
* Canadian dollar jumps before speech by BOC head Poloz
* Graphic: World FX rates in 2017 tmsnrt.rs/2egbfVh
By Patrick Graham
LONDON, June 28 (Reuters) - The euro surged to a one-year high on Wednesday, adding to its biggest daily gain in more than a year a day earlier following a change in tone by European Central Bank President Mario Draghi.
The hints in Draghi’s speech to a major central bank conference in Portugal convinced investors that ECB policymakers are ready to start to withdraw the emergency stimulus for the economy that has dominated policy-making for almost a decade.
That provoked the banking world’s single biggest cheerleaders for a stronger dollar, Deutsche Bank, to abandon calls for a stronger greenback and instead call the end to a dollar rally dating back to 2014.
“Our main message is that the EUR is likely to be the key vehicle via which financial conditions in the Euro-area will be tightened,” Deutsche analyst George Saravelos said in a note to clients on Wednesday.
“We now see the risks as shifting towards an attempted break-out of the euro’s multi-year 1.05-1.15 range to the topside.”
Saravelos, who at the height of the dollar’s rally called for the euro to fall to $0.85 by the end of this year, raised his end of year forecast from $1.03 to $1.16.
In Asian and early European trade, the euro rose another 0.7 percent, adding to a 1.4 percent daily gain on Tuesday. It traded half a percent higher on the day at $1.1365 by 1100 GMT.
The dollar also dipped a third of a percent to 112.12 yen.
The latest failure of Republicans to pass healthcare legislation in the United States was also playing in to the dollar’s weakness, further undermining faith in President Donald Trump’s promises of other measures to support growth.
Eyes were again fixed on the central banking conference in Sintra, Portugal, with several ECB officials speaking, along with Bank of Canada Governor Stephen Poloz and the Bank of England’s Mark Carney.
The Canadian dollar, among the most volatile of the G10 group of developed world currencies this year, gained almost 1 percent against its U.S. counterpart in morning trade in Europe.
Poloz and deputy Carolyn Wilkins set the stage for hikes sooner than had been anticipated in appearances two weeks ago, although a dip in inflation since has cooled expectations of a move as early as July.
“Has the BoC rate assessment gotten ahead of itself? We’ll perhaps find out today,” said Saxo Bank analyst John Hardy. “A small minority are looking for a rate hike already.”
The dollar’s weakness pushed sterling, again under pressure from Britain’s recently volatile politics, above $1.28 to its highest since Prime Minister Theresa May lost her parliamentary majority on June 8.
Conversely, it hit its weakest since November at 88.79 pence per euro.
“No matter the subtlety of any shift in guidance (by Draghi), the reaction in a yield-sensitive market is generally binary and we may well have to add currency appreciation to the risks facing ECB policy,” said Bank of New York Mellon strategist Neil Mellor.
“Euro bulls may now feel that they have the perfect opportunity to challenge the post-2015 trading range whose ceiling is a couple of big figures north of spot.”
For Reuters Live Markets blog on European and UK stock markets see reuters://realtime/verb=Open/url=http://emea1.apps.cp.extranet.thomsonreuters.biz/cms/?pageId=livemarkets
Editing by Ed Osmond and Richard Balmforth