NEW YORK (Reuters) - The dollar fell to its lowest level in nearly two years against the euro on Thursday after European Central Bank chief Mario Draghi said policymakers would discuss possible changes to its bond-buying scheme in the autumn.
Though Draghi said no date had been set for discussing any changes to the program and that ECB rate-setters had been unanimous in their decision not to change their guidance on monetary policy, investors suspected discussions in the autumn would lead to monetary tightening next year.
The euro climbed as high as $1.1655 EUR= against the greenback after Draghi spoke, putting it up as much as 1.2 percent on the day and marking its highest level since August 2015. The euro was last on course for its biggest daily percentage gain in more than three weeks.
The dollar index, which measures the greenback against a basket of six major rivals, hit a session low of 94.090 .DXY, marking its lowest level in nearly a year. The index pared some losses in afternoon U.S. trading and was last down 0.5 percent at 94.286.
“The marketplace is looking for a good potential for (quantitative easing) reduction to start in September or at least to be announced in September,” said Richard Scalone, co-head of foreign exchange at TJM Brokerage in Chicago.
Analysts said the dollar also remained weaker given the collapse late on Monday of a Republican bill to overhaul of the U.S. healthcare system. Weak economic data has also lowered expectations for another interest rate increase from the Federal Reserve later this year.
”The dollar is now suffering and lagging due to the (Trump) administration’s inability to push through any kind of reforms,“ said Jason Leinwand, founder of FirstLine FX Currency Strategy in Randolph, New Jersey. in policy from the Bank of Japan,” Leinwand said.
The dollar was last flat against the yen at 111.96 yen after touching a more than three-week low of 111.49 earlier.
The Bank of Japan kept monetary policy steady on Thursday but once again pushed back the timing for achieving its ambitious inflation target. The view that the BoJ was maintaining its easy money policies allowed the dollar to remain somewhat steady against the yen, analysts said.
”There is not going to be any shift “So (the) yen should continue to remain on the weak side.”
Reporting by Sam Forgione; additional reporting by Saikat Chatterjee in London; Editing by Meredith Mazzilli and Sandra Maler