June 6, 2018 / 2:56 PM / 3 months ago

FOREX-Euro rebound boosted by ECB comments on ending stimulus

    * Euro boosted by upbeat ECB comments
    * ECB to discuss unwinding QE this month
    * Speech by Italian PM Conte mixed blessing for euro
    * Graphic: World FX rates in 2018 tmsnrt.rs/2egbfVh

 (Adds comments, FX table, updates prices in text, changes
byline, dateline; previous LONDON)
    By Gertrude Chavez-Dreyfuss
    NEW YORK, June 6 (Reuters) - The euro rose to a nearly
two-week high against the dollar on Wednesday after officials
said the European Central Bank could wind down its stimulus
program by the end of the year, as inflation has risen to its
target. 
    Europe's common currency was on track to post its largest 
weekly gain versus the dollar since mid-February.
    Having revived growth with an unprecedented 2.55 trillion
euro ($2.99 trillion) bond purchase program, the ECB has been
debating whether to end the purchases this year as the threat of
deflation has passed and the bloc is on its best growth run in a
decade. 
    Many traders expected the central bank to remain cautious at
its June 14 policy meeting, given the uncertainty caused by a
political crisis in Italy. 
    But ECB chief economist Peter Praet said on Wednesday the
central bank would next week debate whether to unwind bond
purchases gradually.
    Germany's central bank head said market expectations for an
end to bond-buying this year were plausible.
    "The notion that the ECB could end stimulus sooner rather
than later is a boon for the euro as it suggests an earlier
arrival of an eventual rate hike from rock-bottom levels," said
Joe Manimbo, senior market analyst at Western Union Business
Solutions in Washington.
    Praet's comments pushed the euro to $1.1796, the
highest since May 22, and it also hit a more-than-one-week high
of 1.1640 francs versus the safe-haven Swiss franc.
    "A breach of the $1.18 barrier will attract more euro
bulls," said Viash Sreemuntoo, corporate trader at XE.
    As well as boosting the euro, analysts said the comments
would introduce heightened volatility in the options markets
over the ECB meeting.
    "Markets have already factored in a U.S. rate hike; that
means the ECB is the most likely trigger for heightened
volatility and I'm expecting to see that as we head into the
meeting," said Ulrich Leuchtmann, head of FX strategy at
Commerzbank.
    The euro's rise put pressure on the U.S. dollar index
, which measures the greenback versus a basket of six
major currencies. The index fell 0.4 percent to 93.518.
    The ECB comments followed a speech by Italy's new Prime
Minister Giuseppe Conte, whose promise of radical change had a
mixed impact on the euro.
    "The Italians have a government and it is doing what it said
it would do," said John Taylor, president and founder of
research firm Taylor Global Vision in New York.
    "In itself that should be normal, but in this case it is
shocking to the idea of Europe as it has be constructed by
Brussels, the German government, and the ECB/Bundesbank," he
added.
    
    ========================================================
    Currency bid prices at 10:40AM (1440 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
                                              Session                                           
 Euro/Dollar      EUR=        $1.1774        $1.1717     +0.49%         -1.85%      +1.1796     +1.1711
 Dollar/Yen       JPY=        109.9500       109.7800    +0.15%         -2.41%      +110.2300   +109.7900
 Euro/Yen         EURJPY=     129.47         128.65      +0.64%         -4.22%      +129.8200   +128.6200
 Dollar/Swiss     CHF=        0.9855         0.9844      +0.11%         +1.15%      +0.9885     +0.9836
 Sterling/Dollar  GBP=        1.3422         1.3394      +0.21%         -0.67%      +1.3443     +1.3385
 Dollar/Canadian  CAD=        1.2883         1.2968      -0.66%         +2.43%      +1.2974     +1.2859
 Australian/Doll  AUD=        0.7669         0.7615      +0.71%         -1.69%      +0.7676     +0.7614
 ar                                                                                             
 Euro/Swiss       EURCHF=     1.1605         1.1535      +0.61%         -0.72%      +1.1639     +1.1532
 Euro/Sterling    EURGBP=     0.8769         0.8749      +0.23%         -1.28%      +0.8778     +0.8740
 NZ               NZD=        0.7043         0.7023      +0.28%         -0.61%      +0.7059     +0.7022
 Dollar/Dollar                                                                                  
 Dollar/Norway    NOK=        8.0825         8.1101      -0.34%         -1.52%      +8.1191     +8.0637
 Euro/Norway      EURNOK=     9.5180         9.5043      +0.14%         -3.36%      +9.5452     +9.4924
 Dollar/Sweden    SEK=        8.7293         8.7500      +0.27%         +6.43%      +8.7544     +8.7049
 Euro/Sweden      EURSEK=     10.2785        10.2510     +0.27%         +4.47%      +10.2895    +10.2375
 
 (Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by
Tom Finn in London; Editing by Dan Grebler)
  
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