October 26, 2017 / 2:54 PM / a year ago

FOREX-Euro tumbles on ECB decision to rein in bond purchases

    * ECB's move to pare asset purchase in line with
    * Draghi sees improving growth but inflation stays muted
    * Speculation on Fed chair nominee keeps traders on edge
    * Dollar index reaches 3-month peak

 (Updates market action, changes dateline, previous LONDON)
    By Richard Leong
    NEW YORK, Oct 26 (Reuters) - The euro fell on Thursday,
putting it on track for its worst day against the dollar in a
month as the European Central Bank's decision to extend its bond
purchases into 2018 at a reduced rate spurred selling of the
single currency. 
    As expected, the ECB said it would cut asset purchases to 30
billion euros from 60 billion euros starting in January while
also extending the scheme by nine months to September.

    Draghi, who expressed some optimism about euro zone growth
at his press conference, remained cautious about the region's
sluggish inflation which would need continued heavy stimulus in
the form of quantitative easing (QE) from the ECB.
    "With Draghi's openness to QE, it's a victory for the
doves," said Marc Chandler, global head of currency strategy at
Brown Brothers Harriman & Co. in New York. 
    The ECB's move on its bond purchases came five weeks after
the Federal Reserve announced its plan to shrink its $4.5
trillion balance sheet that had ballooned from three rounds of
QE this month.
    At 10:02 p.m. (1402 GMT), the euro was at $1.1720, down 0.8
percent from late Wednesday. It was poised for its steepest
one-day loss against the greenback since Sept. 25, Reuters data
    The single currency was down 0.7 percent at 133.41 yen
. It retreated from 134.48 yen reached earlier on
Thursday which was its strongest against the Japanese currency
since December 2015.
    "The market is still very long euros," Chandler said.
    The latest CFTC data showed that speculative net longs in
the euro have retreated from their record highs but were still
near multi-year highs at above $13 billion.

    The dollar has risen in recent days on optimism about 
forthcoming federal tax cuts and speculation U.S. President
Donald Trump would select someone to head the Fed who may want
to raise interest rates at a faster pace than current Fed Chair
Janet Yellen.
    Trump has narrowed his search for Fed chief to Fed Governor
Jerome Powell and Stanford University economist John Taylor,
Politico reported on Thursday, citing one source as saying,
while another counselled caution.
    Yellen, Trump's economic adviser Gary Cohn and former Fed
Governor Kevin Warsh are also under consideration for the post.
    Trump is expected to announce his candidate before his Asian
trip in early November.
    An index that tracks the dollar against euro, yen and four
other currencies hit a three-month high at 94.306. It was last
at 94.247, up 0.6 percent on the day.
    Currency bid prices at 10:35AM (1435 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
 Euro/Dollar      EUR=        $1.1715        $1.1812     -0.82%         +11.43%     +1.1836     +1.1708
 Dollar/Yen       JPY=        113.7700       113.7300    +0.04%         -2.65%      +113.8800   +113.3500
 Euro/Yen         EURJPY=     133.29         134.35      -0.79%         +8.24%      +134.4800   +133.3100
 Dollar/Swiss     CHF=        0.9950         0.9895      +0.56%         -2.24%      +0.9955     +0.9877
 Sterling/Dollar  GBP=        1.3173         1.3262      -0.67%         +6.79%      +1.3279     +1.3172
 Dollar/Canadian  CAD=        1.2821         1.2794      +0.21%         -4.53%      +1.2826     +1.2781
 Australian/Doll  AUD=        0.7682         0.7703      -0.27%         +6.47%      +0.7718     +0.7679
 Euro/Swiss       EURCHF=     1.1656         1.1691      -0.30%         +8.76%      +1.1710     +1.1653
 Euro/Sterling    EURGBP=     0.8890         0.8904      -0.16%         +4.37%      +0.8956     +0.8881
 NZ               NZD=        0.6851         0.6885      -0.49%         -1.30%      +0.6903     +0.6849
 Dollar/Norway    NOK=        8.1151         8.0134      +1.27%         -6.04%      +8.1228     +8.0026
 Euro/Norway      EURNOK=     9.5070         9.4684      +0.41%         +4.64%      +9.5207     +9.4653
 Dollar/Sweden    SEK=        8.3050         8.2164      +0.25%         -8.81%      +8.3169     +8.1911
 Euro/Sweden      EURSEK=     9.7312         9.7067      +0.25%         +1.58%      +9.7447     +9.6802
All spots FX= 
Tokyo spots AFX= 
Europe spots EFX= 
Volatilities FXVOL= 
Tokyo Forex market info from BOJ TKYFX World central bank news
Economic Forecasts... ECON   Official rates...INT/RATE
Forex Diary.......MI/DIARY   Top events........M/DIARY
Diaries...........DIARY Diaries Index........IND/DIARY
Press Digests.....PRESS Polls on G7 economies..SURVEY/
European markets......MARKETS/))


 (Additional reporting by Saikat Chatterjee, Ritvik Carvalho and
Polina Ivanova in London; Editing by Robin Pomeroy and Susan
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