* Euro slips as markets await ECB policy action
* Uncertainty over more action from ECB keeping euro bears
* BOJ's Kuroda says dollar strength wont hurt Japanese
(Updates levels, adds comments)
By Anirban Nag
LONDON, Sept 4 The euro slipped against the
dollar on Thursday, hovering near one-year lows hit earlier this
week on expectations that the European Central Bank will flag
the possibility of more monetary stimulus.
Hopes of a peaceful resolution to the Russian-Ukraine
conflict had shored up the common currency, only for Ukraine's
prime minister to dismiss the proposal outlined by President
The Swedish crown rose against the euro after
the Riksbank kept interest rates unchanged as expected and did
not push back the timing of its first rate hike as some in the
market had anticipated.
Overall, the focus was on the euro before the ECB rate
decision at 1145 GMT and President Mario Draghi's press
conference 45 minutes later. The euro has already fallen a long
way, dropping from a high of $1.3701 on July 1 to $1.3110
on Tuesday. It last fetched $1.3138, down 0.1 percent.
"The euro's downtrend is intact," said Niels Christensen, FX
strategist at Nordea.
"But given a lot of the dovishness from the ECB has already
been priced in there is a risk of a bounce if the ECB does not
live up to expectations. Nevertheless, investors will look at
upticks to initiate fresh short positions."
Traders said some euro bears were just taking a breather
due to uncertainty over whether the ECB will actually deliver a
fresh round of policy stimulus or simply lay the groundwork to
act at a later date.
The euro could bounce to as high as around $1.3250 if the
ECB holds off from any more easing, said Masafumi Yamamoto,
market strategist for Praevidentia Strategy in Tokyo.
"I don't think there is a need to lower interest rates just
yet," he said, adding that while inflation in the euro zone has
been slowing, the ECB will probably wait to see how the TLTRO
plays out. The first TLTRO operation, the ECB's bank funding
plan unveiled in June, is set for Sept. 18.
BOJ AND RIKSBANK MEET
To be sure, the ECB is under strong pressure to tackle
stubbornly low inflation at a time when the conflict in Ukraine
threatens to destabilise the region's fragile recovery.
The euro's weakness saw the dollar index climb to 82.924
, not far from Wednesday's 14-month peak of 83.058.
The dollar was firmer against the yen, hitting a
day's high of 105.02 yen after Bank of Japan Governor Haruhiko
Kuroda said a stronger dollar would not hurt the Japanese
Earlier, the BoJ kept policy unchanged as widely expected,
and retained its upbeat view on the economy.
In Europe, the Swedish crown rose to a day's high against
the euro after the Riksbank kept interest rates unchanged at
0.25 percent. It also stuck to its previous forecast that it
would start to tighten policy at the end of next year.
In a Reuters poll, the majority also expected no change in
the rate path, although some had said there was a chance the
Riksbank would push back the timing of its first rate increase.
The euro fell to 9.1850 crowns after the
announcement from around 9.2160 crowns, leaving it 0.2 percent
lower on the day.
"It is a relief that the Riksbank was not as dovish as some
had expected, especially given data of late has been pretty
mixed," said Nordea's Christensen.
(additional reporting by Masayuki Kitano; Editing by Hugh