Bonds News

FOREX-Euro dips on report on ECB inflation goal, dollar flat

    * Mnuchin says no change to use of stabilization fund 
    * Pound rises on retail sales gain, plans to avert no-deal
    * Graphic: World FX rates in 2019

 (Updates market action, changes dateline, previous LONDON)
    By Richard Leong
    NEW YORK, July 18 (Reuters) - The euro dipped on Thursday
following a report the European Central Bank staff is studying a
potential change to its inflation goal, while the dollar was
little changed amid bets the Federal Reserve would lower
interest rates in two weeks.
    Sterling rose for a second day, rebounding from a 27-month
low against the greenback, on surprisingly strong UK domestic
retail sales last month and developments that would make it
harder for the next prime minister to force a no-deal Brexit.
    Trading among major currencies was mostly muted as market
players wait to see whether the Fed would lower U.S. rates for
the first time in a decade and if it would signal more rate cuts
down the road.
    The futures market implied traders are positioned for at
least three rate cuts by year-end, with the first decrease at
the Fed's July 30-31 policy meeting.
    "If it sounds like it's one and done, there would be massive
repricing," said Steven Englander, global head of G10 FX
research at Standard Chartered. "That would be hard for the
market to digest."
    At 11:20 a.m. (1520 GMT), an index that tracks the dollar
against a basket of currencies was down 0.07% at 97.152.
    The dollar did not budge after U.S. Treasury Secretary
Steven Mnuchin told Bloomberg earlier Thursday there has been
"no change to the dollar policy." He later told Reuters that
there was no change to the use of a $94.6 billion federal fund
intended to stabilize currencies during times of market turmoil.
    There has been speculation whether the White House would
intervene to weaken the dollar after U.S. President Donald Trump
lashed out at Europe and China earlier this month for what he
called their "big currency manipulation game."
    The euro dipped against the greenback following a Bloomberg
report that the ECB staff are studying a potential change to the
bank's inflation goal of "near 2%."
    Such a move would potentially leave the door open for more
ECB stimulus to continue for a longer period, which would exert
downward pressure on the single currency.
    The euro hit a session low of $1.1205 before moving to
$1.1228, which was nearly unchanged on the day.
    The dollar fell to a two-week low at 107.620 yen. 
    Sterling strengthened against the greenback after data
showed UK retail sales unexpectedly grew 1.0% in June, stoking
hopes the economy would avert a downturn in the second quarter.

    On Thursday, British lawmakers supported proposals to make
it harder for the next prime minister to force through a no-deal
Brexit by suspending Parliament.
    The pound was up 0.47% at $1.2489 after hitting a
27-month low of $1.2382 the previous day. The euro
was 0.42% lower at 89.9 pence, below a six-month high of 90.15
pence struck on Wednesday.
    Currency bid prices at 11:21AM (1521 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
 Euro/Dollar      EUR=        $1.1222        $1.1223     -0.01%         -2.15%      +1.1244     +1.1206
 Dollar/Yen       JPY=        107.7900       107.9400    -0.14%         -2.24%      +108.0100   +107.6200
 Euro/Yen         EURJPY=     120.98         121.13      -0.12%         -4.15%      +121.2300   +120.8000
 Dollar/Swiss     CHF=        0.9866         0.9873      -0.07%         +0.53%      +0.9891     +0.9848
 Sterling/Dollar  GBP=        1.2485         1.2431      +0.43%         -2.13%      +1.2494     +1.2428
 Dollar/Canadian  CAD=        1.3083         1.3047      +0.28%         -4.06%      +1.3095     +1.3041
 Australian/Doll  AUD=        0.7042         0.7009      +0.47%         -0.10%      +0.7043     +0.7007
 Euro/Swiss       EURCHF=     1.1074         1.1080      -0.05%         -1.60%      +1.1089     +1.1061
 Euro/Sterling    EURGBP=     0.8986         0.9025      -0.43%         +0.02%      +0.9039     +0.8980
 NZ               NZD=        0.6751         0.6730      +0.31%         +0.51%      +0.6752     +0.6730
 Dollar/Norway    NOK=        8.5973         8.5889      +0.10%         -0.48%      +8.6086     +8.5779
 Euro/Norway      EURNOK=     9.6480         9.6395      +0.09%         -2.60%      +9.6630     +9.6347
 Dollar/Sweden    SEK=        9.3543         9.3653      -0.13%         +4.36%      +9.3752     +9.3533
 Euro/Sweden      EURSEK=     10.4996        10.5132     -0.13%         +2.30%      +10.5275    +10.4934

 (Reporting by Richard Leong in New York and Saikat Chatterjee
in London; Editing by Kevin Liffey and Dan Grebler)