* Euro edges towards 3-week high ahead of ECB
* Yen holds onto gains amid doubts over BOJ policy
* Aussie edges up after Chinese trade data
By Jemima Kelly
LONDON, Sept 8 The euro edged towards a two-week
high against the dollar on Thursday, with traders waiting for a
European Central Bank policy decision that many doubt will have
any significant impact on the euro, even if monetary policy is
Investors are focusing on whether the ECB will extend its
asset-purchase programme beyond March 2017, and whether it will
tweak the programme to ease supply scarcity issues - the pool of
bonds it can currently buy, in particular German Bunds, is
dwindling because of record-low yields.
Growth and inflation remain weak, despite record-low
interest rates and 1.2 trillion euros' worth of quantitative
easing in the past year and a half.
The euro is barely 3 percent weaker against the dollar
than when the bond-purchase programme was first
announced, in January 2015, and it is up almost 4 percent this
Nearly all analysts polled by Reuters expect rates to remain
unchanged on Thursday and most predict that they have already
bottomed out. But they expect the ECB's 80 billion-euro monthly
asset buys to be extended before the end of the year
The euro edged up 0.2 percent to $1.1265, close to
Wednesday's high of $1.12725.
"If the ECB really wants to weaken the euro, it would have
to surprise on the expansionary side and it would probably have
to deliver something new - not just an extension of QE or
another rate cut even," said Commerzbank currency strategist Thu
Lan Nguyen, in Frankfurt.
"Those are the measures the market already knows, and the
market knows they haven't really helped in the last couple of
years to bring inflation back to target."
The central bank will publish its latest policy decision at
1145 GMT, followed at 1230 GMT by a press conference with ECB
chief Mario Draghi.
The yen edged up 0.2 percent against the dollar to
101.585 yen, clinging to gains of almost 3 percent made in the
last four days, after a Bank of Japan deputy governor gave few
fresh clues on whether the central bank will expand its monetary
stimulus this month.
Analysts said the comments by BOJ Deputy Governor Hiroshi
Nakaso seemed similar in tone to remarks by BOJ Governor
Haruhiko Kuroda earlier this week, in which Kuroda acknowledged
the costs of the BOJ's aggressive stimulus.
Nakaso said on Thursday the central bank will pursue its
massive stimulus programme by striking the right balance between
its powerful policy effects and potential adverse effects on
"The main message doesn't seem all that different ... The
general tone of weighing the costs and benefits were in Governor
Kuroda's comments as well," said Shinichiro Kadota, senior FX
and yen rates strategist for Barclays in Tokyo.
"As the market reaction suggests, I don't think it was
anything that leads to any big change to the outlook," he added.
Data showing that China's imports unexpectedly rose in
August for the first time in nearly two years helped lend
support to the Australian dollar, which rose half a percent to
hit a three-week high of $0.7716.
For Reuters new 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
(Additional reporting by Masayuki Kitano in Singapore and
Hideyuki Sano in Tokyo, editing by Larry King)