FOREX-Euro rises versus dollar as ECB keeps rates steady

Thu Dec 5, 2013 10:14am EST

Related Topics

* ECB leaves rates unchanged, inflation to stay below target

* U.S. 3rd-quarter growth revised up, jobless claims fall

* Norwegian crown hits four-year low versus euro

By Wanfeng Zhou

NEW YORK, Dec 5 (Reuters) - The euro rose to a one-month high against the dollar on Thursday after the European Central Bank disappointed some traders who had hoped for more aggressive easing measures in the euro zone, leaving a key interest rate unchanged.

The ECB meeting overshadowed stronger-than-expected data on U.S. third-quarter growth and weekly jobless claims, which briefly lifted the dollar across the board.

The ECB held its key interest rate at 0.25 percent at its last policy meeting of the year, choosing not to follow through on November's surprise cut.

ECB President Mario Draghi said euro zone inflation will stay well below target for the next two years and the ECB is ready to act if necessary to lift a listless economy.

"Clearly, they didn't make a move. They just briefly discussed the negative deposit rate and that was the real key," said Chris Tevere, senior currency strategist at Forex.com in New York. "Some people were pricing in that maybe they cut rates a little bit further and maybe they move to that before the end of the year.

"More importantly, it also doesn't look like it's in the imminent future either."

The euro rose 0.2 percent to $1.3622, having climbed as high as $1.3650, according to Reuters data, the strongest since the end of October.

The euro zone currency also gained versus the British pound, rising 0.6 percent to 83.44 pence.

"Today's meeting could leave those betting on more indications of aggressive ECB easing disappointed," said Valentin Marinov, currency strategist at Citigroup in London. He said this could help the euro squeeze higher for now against U.S. dollar, yen and sterling.

"We continue to like short euro/sterling positions over longer term. The downside risks for euro/dollar could intensify if the U.S. data continues to surprise on the upside from here."

The U.S. economy grew faster than initially estimated in the third quarter as businesses aggressively accumulated stock, while initial claims for state unemployment benefits dropped 23,000 to a seasonally adjusted 298,000 last week, data showed on Thursday.

The dollar briefly pared losses against the yen and hit a session high against the euro after the data.

It was last down 0.3 percent at 102.04 yen as the Japanese yen gained as stock markets fell, with European shares losing ground for a fourth straight day. Investors often flock to the yen in times of market stress.

The dollar index, which measures the greenback versus a basket of six currencies, fell 0.2 percent to 80.488.

The Norwegian crown fell to a four-year low of 8.4210 crowns per euro after Norway's central bank pushed back the first interest rate hike by a year.

The yen gained as stock markets fell, with European shares losing ground for a fourth straight day. Investors often flock to the yen in times of market stress.

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