* Euro pops up from a near one-year low against USD
* Market reassesses dovish ECB expectations for next week
* Upbeat Australian business investment data supports Aussie
(Updates prices, adds comments)
By Ian Chua and Masayuki Kitano
SYDNEY/SINGAPORE, Aug 28 The euro inched higher
on Thursday and held above a one-year low versus the dollar,
getting some respite as feverish speculation of an imminent
round of easing by the European Central Bank cooled.
Sources told Reuters on Wednesday that the ECB is unlikely
to take new policy action next week unless inflation figures on
Friday show the euro zone sinking significantly towards
That prompted investors to trim very bearish positions in
the euro. The common currency rose 0.2 percent to $1.3214
, up from Wednesday's low near $1.3152, which was the
euro's weakest level in almost a year.
The respite for the euro may not last very long, however,
said Callum Henderson, global head of FX research for Standard
Chartered Bank in Singapore.
"The overall bias remains lower in the euro...the only
question within that is how far and how fast," Henderson said,
adding that euro zone inflation data on Friday would be a focal
"Our base case is still that the ECB is likely to do QE some
time over the next four to six months," he said, referring to
the possibility of an asset-buying programme of some form by the
ECB, or quantitative easing.
Preliminary German inflation data due later Thursday will be
closely watched to gauge how soft the euro zone numbers might
Against the yen, the euro rose 0.1 percent to 137.10
, up from Wednesday's two-week trough of 136.75.
Against the Swiss franc, the euro held steady at 1.2072
, up from Wednesday's low of 1.2060, its lowest level
since late 2012.
"The euro is going through a moderate corrective bounce as
markets reassess their dovish ECB expectations for next week's
policy meeting," analysts at BNP Paribas wrote in a note to
They said "investors should position for further euro
weakness" believing there are other drivers in place including
an escalating trade war with Russia and a shift in the Federal
Reserve's policy stance that should weigh on the currency.
The rebound in the common currency knocked the dollar index
off a 13-month peak. It last stood at 82.340, down from
the high set on Wednesday at 82.727.
Against the yen, the dollar eased 0.1 percent to about
103.76 yen, having retreated from a seven-month high of
104.49 yen set on Monday.
The Australian dollar fared reasonably well and touched a
three-week high of $0.9373 after data showed a
better-than-expected outlook for Australian business investment.
It last stood at $0.9359, up 0.2 percent on the day.
Later on Thursday, an update to second quarter U.S. growth
data should also garner some attention, although the report
should affirm the economy had rebounded sharply from the first
(Editing by Eric Meijer & Shri Navaratnam)