September 24, 2018 / 3:08 PM / 8 months ago

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

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

 (Recasts, updates prices, adds comment, changes byline,
dateline; previous LONDON)
    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 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.
    But 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 late morning trading, the euro rose 0.3 percent against
the dollar to $1.1783. 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 flat at 112.56 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 0.2 percent at 94.027,
mainly weighed down by the euro's gains.
    Currency bid prices at 10:45AM (1445 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
 Euro/Dollar      EUR=        $1.1775        $1.1749     +0.22%         -1.84%      +1.1815     +1.1724
 Dollar/Yen       JPY=        112.4800       112.5600    -0.07%         -0.17%      +112.7000   +112.2800
 Euro/Yen         EURJPY=     132.46         132.29      +0.13%         -2.01%      +133.0600   +131.9100
 Dollar/Swiss     CHF=        0.9599         0.9584      +0.16%         -1.48%      +0.9608     +0.9581
 Sterling/Dollar  GBP=        1.3130         1.3076      +0.41%         -2.82%      +1.3166     +1.3057
 Dollar/Canadian  CAD=        1.2926         1.2913      +0.10%         +2.77%      +1.2949     +1.2909
 Australian/Doll  AUD=        0.7258         0.7289      -0.43%         -6.96%      +0.7281     +0.7250
 Euro/Swiss       EURCHF=     1.1308         1.1261      +0.42%         -3.26%      +1.1324     +1.1254
 Euro/Sterling    EURGBP=     0.8968         0.8981      -0.14%         +0.96%      +0.8996     +0.8936
 NZ               NZD=        0.6657         0.6684      -0.40%         -6.05%      +0.6687     +0.6654
 Dollar/Norway    NOK=        8.1389         8.1471      -0.10%         -0.82%      +8.1613     +8.1176
 Euro/Norway      EURNOK=     9.5858         9.5732      +0.13%         -2.67%      +9.6055     +9.5566
 Dollar/Sweden    SEK=        8.7982         8.7852      +0.35%         +7.27%      +8.8166     +8.7537
 Euro/Sweden      EURSEK=     10.3616        10.3250     +0.35%         +5.31%      +10.3765    +10.3050
 (Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by
Saikat Chatterjee in London
Editing by Paul Simao)
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