September 10, 2019 / 2:12 PM / 5 months ago

FOREX-Dollar firms, ECB meeting in focus

    * ECB meeting on Thursday main market focus
    * BOJ policymakers may discuss expanding stimulus

 (New throughout, updates trading and comments to U.S. market
open, new byline, changes dateline, previous LONDON)
    By Karen Brettell
    NEW YORK, Sept 10 (Reuters) - The U.S. dollar firmed against
the euro on Tuesday but held in its tight recent range before
the European Central Bank on Thursday is expected to cut
interest rates deeper into negative territory and possibly
restart asset purchases.
    Investors are weighing whether further monetary stimulus
will be effective in countering economic weakness in the euro
zone, and whether the ECB will disappoint dovish expectations
baked into the market.
    “People are waiting on the ECB, that’s really the big event
this week,” said Erik Nelson, a currency strategist at Wells
Fargo in New York. But, “given some of the pushback we’ve seen
from the hawks on the board, we could easily see a disappointing
    ECB policymakers are leaning toward a stimulus package that
includes a rate cut, a beefed-up pledge to keep rates low for
longer and compensation for banks over the side effects of
negative rates, five sources familiar with the discussion said
last week.
    Many also favor restarting asset buys, but opposition from
some northern European countries is complicating this issue.

    The dollar was last up 0.07% against the single currency
 at $1.1038. It has traded in a tight range between
$1.1014 and $1.1084 for four days.
    The euro got a temporary boost on Monday on a Reuters report
that Germany is considering the creation of a "shadow budget"
that would enable Berlin to boost public investment beyond the
restrictions of constitutionally enshrined debt rules.

    Germany can counter a possible economic crisis by injecting
"many, many billions of euros" into the economy, Finance
Minister Olaf Scholz said on Tuesday, signaling his readiness
for a big stimulus package if the economy tips into recession.

    The Japanese yen weakened to its lowest level against
the greenback since Aug. 2 after Reuters reported that Bank of
Japan policymakers are more open to discussing the possibility
of expanding stimulus at their board meeting on Sept. 18-19 as
the fallout from the U.S.-China trade war spreads.
    Demand for the safe-haven currency has also dropped since
China and the United States on Thursday agreed to hold
high-level talks in early October, boosting risk sentiment.

    In the United States, consumer price inflation data on
Thursday and retail sales data on Friday are the main economic
focus. They will follow a jobs report on Friday that showed U.S.
jobs growth slowed more than expected in August.
    The Federal Reserve is expected to cut rates when it meets
on Sept. 17-18.
    Currency bid prices at 9:53AM (1353 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
 Euro/Dollar      EUR=        $1.1038        $1.1046     -0.07%         -3.76%      +1.1059     +1.1033
 Dollar/Yen       JPY=        107.2400       107.2300    +0.01%         -2.74%      +107.4900   +107.1900
 Euro/Yen         EURJPY=     118.38         118.46      -0.07%         -6.21%      +118.7600   +118.3700
 Dollar/Swiss     CHF=        0.9904         0.9919      -0.15%         +0.92%      +0.9931     +0.9897
 Sterling/Dollar  GBP=        1.2371         1.2345      +0.21%         -3.03%      +1.2375     +1.2308
 Dollar/Canadian  CAD=        1.3175         1.3166      +0.07%         -3.39%      +1.3191     +1.3160
 Australian/Doll  AUD=        0.6850         0.6861      -0.16%         -2.82%      +0.6869     +0.6850
 Euro/Swiss       EURCHF=     1.0933         1.0957      -0.22%         -2.85%      +1.0969     +1.0928
 Euro/Sterling    EURGBP=     0.8920         0.8946      -0.29%         -0.71%      +0.8974     +0.8922
 NZ               NZD=        0.6408         0.6422      -0.22%         -4.60%      +0.6441     +0.6411
 Dollar/Norway    NOK=        8.9573         8.9242      +0.37%         +3.69%      +8.9869     +8.9214
 Euro/Norway      EURNOK=     9.8877         9.8593      +0.29%         -0.18%      +9.9204     +9.8520
 Dollar/Sweden    SEK=        9.7110         9.6571      +0.46%         +8.34%      +9.7580     +9.6544
 Euro/Sweden      EURSEK=     10.7191        10.6695     +0.46%         +4.43%      +10.7737    +10.6656

Reporting by Karen Brettell; editing by Jonathan Oatis)
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