September 24, 2018 / 4:33 PM / 8 months ago

FOREX-Euro rises to more than 3-month high on Draghi's comments

    * Investors expect rate hike from the Fed this week
    * ECB's Draghi sees vigorous pickup in inflation
    * Graphic: World FX rates in 2018

 (Adds reports on U.S. Department of Justice official, updates
prices, FX table)
    By Gertrude Chavez-Dreyfuss
    NEW YORK, Sept 24 (Reuters) - The euro rose to more than a
three-month high against the dollar on Monday after European
Central Bank chief Mario Draghi said he sees a vigorous pickup
in euro zone inflation, backing moves toward unwinding an ECB
asset purchase program meant to stimulate the economy.
    The single currency has been on an uptrend the last few
weeks, bolstered by generally solid European economic data. Over
the last 10 days, the euro has risen 2.5 percent versus the
    The dollar, meanwhile, was little changed to slightly higher
against the yen, as investors searched for fresh clues to extend
a multi-month rally in the greenback before a widely-expected
interest rate hike by the U.S. Federal Reserve this week.
    The dollar briefly dipped against the yen after some media
said U.S. Deputy Attorney General Rod Rosenstein was headed to
the White House amid reports he had offered to resign in
anticipation of being fired by President Donald
    Other media, however, reported that Rosenstein, who oversees
the special counsel investigation into Russia's role in the 2016
U.S. presidential election, had not offered to resign. 
    With the Fed decision a few days away, markets were jolted
by Draghi's hawkish comments on inflation and wage growth even
though he affirmed the ECB's pledge to keep rates at their
current, rock-bottom level "through the summer" of next year.

    John Doyle, director of markets at Tempus Consulting in
Washington, said Draghi's remarks reinforced the view that other
central banks are catching up with the Fed in terms of
tightening monetary policy. 
    "The idea of divergence between the Fed tightening and other
central banks either on hold or cutting rates is not there to
support the dollar anymore," Doyle said.
    In midday trading, the euro rose 0.2 percent against the
dollar to $1.1771. It rose to as high as $1.1815, a
3-1/2-month peak.
    The euro earlier was also boosted after German Chancellor
Angela Merkel's coalition government resolved a dispute over the
country's scandal-tainted spy chief on Sunday, ending a threat
to the six-month-old administration.
    Against the yen, the dollar was up 0.1 percent at 112.65 yen
 ahead of this week's Fed meeting.
    With the market forecasting a rate hike this week, another
in December and two more next year - roughly in line with Fed
policymakers' projections - analysts said only unexpectedly
strong data would change those bets.
    "Dollar direction could boil down to how many rate hikes the
Fed pencils in over the coming year," said Joe Manimbo, senior
market analyst at Western Union Business Solutions in
    "The Fed could increase its forecast for 2019 rate hikes
from three to four with inflation showing signs of pushing above
its 2 percent goal, a hawkish scenario that would likely be
positive for the dollar," he added.
    Earlier the dollar snapped a two-week losing streak as the
weekend brought global trade tensions back into the spotlight
after Beijing released a white paper on its trade dispute with
the United States, saying it would seek a reasonable outcome,
while also describing U.S. tactics as "bullying."
    The dollar index was last down 0.1 percent at 94.138,
mainly weighed down by the euro's gains.
    Currency bid prices at 11:55AM (1555 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
 Euro/Dollar      EUR=        $1.1770        $1.1749     +0.18%         -1.88%      +1.1815     +1.1724
 Dollar/Yen       JPY=        112.6200       112.5600    +0.05%         -0.04%      +112.7000   +112.2800
 Euro/Yen         EURJPY=     132.56         132.29      +0.20%         -1.94%      +133.0600   +131.9100
 Dollar/Swiss     CHF=        0.9621         0.9584      +0.39%         -1.25%      +0.9625     +0.9581
 Sterling/Dollar  GBP=        1.3127         1.3076      +0.39%         -2.85%      +1.3166     +1.3057
 Dollar/Canadian  CAD=        1.2932         1.2913      +0.15%         +2.82%      +1.2949     +1.2909
 Australian/Doll  AUD=        0.7261         0.7289      -0.38%         -6.92%      +0.7281     +0.7250
 Euro/Swiss       EURCHF=     1.1324         1.1261      +0.56%         -3.12%      +1.1329     +1.1254
 Euro/Sterling    EURGBP=     0.8963         0.8981      -0.20%         +0.90%      +0.8996     +0.8936
 NZ               NZD=        0.6649         0.6684      -0.52%         -6.17%      +0.6687     +0.6643
 Dollar/Norway    NOK=        8.1320         8.1471      -0.19%         -0.91%      +8.1613     +8.1176
 Euro/Norway      EURNOK=     9.5733         9.5732      +0.00%         -2.80%      +9.6055     +9.5566
 Dollar/Sweden    SEK=        8.7960         8.7852      +0.28%         +7.25%      +8.8166     +8.7537
 Euro/Sweden      EURSEK=     10.3540        10.3250     +0.28%         +5.23%      +10.3765    +10.3050
 (Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by
Saikat Chatterjee in London
Editing by Paul Simao)
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