FOREX-Euro gains after Draghi gives no hint of further easing
* ECB holds rates steady, gives no hint of further easing * Euro also boosted as Spain hits top end of target at bond sale NEW YORK, March 7 (Reuters) - The euro rallied on Thursday as European Central Bank President Mario Draghi gave no hints of further easing in euro zone interest rates after the ECB left its benchmark rate unchanged. The euro zone common currency showed no clear reaction to the ECB decision but it rallied sharply as Draghi began to address a press conference. The ECB had been expected to lower its inflation and growth forecasts, giving Draghi room to cut rates and support the recession-hit economy in coming months. Instead, Draghi said, "Inflation expectations for the euro area remain firmly anchored, in line with our aim of maintaining inflation rates below but close to 2 percent over the medium term. Overall, this will allow our monetary policy stance to remain accommodative." Draghi also said people have underestimated the political commitment to the euro at their own cost. Draghi "has not signaled easing in the months ahead," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington D.C. "That's why we are seeing the euro rally." The euro was up 1 percent on the day at $1.3094. The session peak of $1.3116 marked a five day high. Some US$5.2 billion in euros changed hands using Reuters Dealing.. Healthy demand at a Spanish debt auction also eased some investor concerns about the euro zone. Spain sold 5 billion euros of bonds, hitting the top end of its targeted amount at reduced borrowing costs despite political uncertainty in Italy. "The Spanish auction shows there is still demand (for its debt) which is positive and a little bit surprising considering what is happening in Italy," said Richard Falkenhall, currency strategist at SEB in London. Marc Principato, director of SMB Forex Trading And Education in New York, said the single currency, after breaching minor resistance at $1.3050, faced more significant resistance between $1.3250 and $1.3300 in the coming week. Most analysts say even if borrowing costs for highly indebted euro zone countries like Spain and Italy do not rise, on a more fundamental basis the struggling euro zone economy will need a more accommodative monetary policy stance along with a weaker currency to boost growth. STERLING JUMPS Sterling rebounded from a 2-1/2-year low against the dollar and last traded at $1.5037, up 0.2 percent, after the Bank of England decided not to resume its quantitative easing program. Many investors had bet against the pound in recent weeks on expectations that a grim UK economic outlook would prompt the central bank to pump in more liquidity. The BoE's bank rate is at a record low of 0.5 percent. Against the yen, the dollar was up 0.7 percent at 94.80 yen , after touching a session peak of 94.85, the highest since May 2010. Some US$2.7 billion in yen changed hands using Reuters Dealing. Earlier on Thursday, the Bank of Japan kept monetary policy unchanged but the yen weakened against the dollar on expectations of aggressive easing in the future. Some strategists have revised their forecasts to show sustained yen weakness. UBS changed its end-2013 forecast for the dollar to 100 yen from 85 yen.
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