* Euro hits fresh 6-week lows versus dollar
* ECB's Constancio says ECB ready to act swiftly, if needed
(Updates with GDP data, adds fresh comment)
By Anirban Nag
LONDON, May 15 The euro fell to six-week lows
against the dollar on Thursday, as better-than-expected German
data were outweighed by expectations the European Central Bank
is poised to ease policy at next month's meeting.
The euro hit those lows after ECB Vice President Vitor
Constancio said the central bank was determined to act swiftly
and does not rule out more monetary easing. Media speculation
that the ECB may lower the deposit rate, the rate at which it
accepts surplus cash from banks, into negative territory also
pushed the euro lower, traders said.
Traders said the focus was on final euro zone inflation
data, which is due at 0900 GMT. It is forecast to show a reading
of 0.7 percent, unchanged from the first estimate. Any downside
surprise could push the euro lower.
German economic growth doubled to 0.8 percent quarter on
quarter, beating forecasts, but France missed expectations,
showing the euro zone's second-largest economy was flat in the
first quarter. Euro zone first-quarter GDP is due at 0900 GMT
and is forecast to show the economy expanded 0.4 percent from
the previous quarter - its strongest growth in three years.
"Due to the backward-looking nature of the series, it is
unlikely to have a material impact on euro," said Chris Turner,
head of currency strategy at ING. "Probably more important will
be the April inflation print. Any downside surprise would
reinforce market expectations of ECB rate cuts next month. Until
the next ECB meeting, we expect euro to be primarily driven by
comments from various ECB members."
Reuters on Wednesday quoted sources as saying the ECB is
preparing a package of policy options for its June meeting. They
include cuts in all its interest rates, plus measures aimed at
boosting lending to small- and mid-sized firms.
The euro hit a 2 1/2-year high of $1.3995 against the
dollar last week, but heightened speculation of ECB easing, in
part spurred by bank officials expressing concern over the
currency's strength, knocked it to a six-week low of $1.36855 on
"Except for quantitative easing, which it likely won't
resort to for a while, the ECB does not have a lot of easing
options at its disposal to keep the euro down," said Masafumi
Yamamoto, market strategist at Praevidentia Strategy in Tokyo.
"Therefore it will have to keep sending a steady message,
saying it will ease a step at a time. The various ECB officials
will also have to march in unison and convey the same message,
especially with the dollar also showing signs of weakness," he
The dollar was flat against the yen at 101.95 yen
after losing 0.35 percent on Wednesday, tracking a fall in U.S.
Treasury yields. It fell to the day's low of 101.66 yen after a
report showed Japan's economy grew in the January-March quarter
at its fastest pace more than two years, but the decline was
"Strong economic indicators tend to be associated with
expectations of Bank of Japan foregoing further easing, so there
may have been a knee-jerk reaction," said Kyosuke Suzuki,
director of forex at Societe Generale in Tokyo.
"But there are firm bids for the dollar in the middle
101-yen range and participants are wary of that too, keeping
movements confined in range."
(Additional reporting by Shinichi Saoshiro in Tokyo; Editing by