ECB Drops Guidance on Rate Cuts in Step Toward Stimulus Exit


That reluctance pushed the euro currency down to week-lows against the dollar just above $1.12.

"The day the market has been waiting for", Cole Akeson, a strategist at Sberbank CIB in Moscow, wrote in an emailed note.

European stocks inched higher and the euro and the pound barely budged, as markets readied for a triple-dose of excitement - an ECB meeting, a British election and testimony by the ex-FBI chief fired by Donald Trump last month.

"To be honest I'm absolutely staggered about the degree to which this geopolitical environment and developments are having absolutely no effect on markets", said Saxo Bank head of FX strategy John Hardy.

With price growth estimated at about 1.5% up to and including 2019, the governing council may choose to postpone a change to its forward guidance, which says interest rates will stay at current or lower levels until well past the end of quantitative easing.

As of 1252 BST euro/dollar was down 0.25% to 1.1234.

But since then sterling has been experiencing volatility as the markets await the results of the election.

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European Central Bank President Mario Draghi dropped a long-standing reference to "downside risks" to the euro zone's economic outlook from his policy message on Thursday, saying instead that risks are now "broadly balanced". The polls close at 10 p.m. Thursday night in the United Kingdom.

Comey told US lawmakers in the congressional hearing he had no doubt that Russian Federation had interfered with the election but was confident that no votes had been altered. The dollar index, which measures the greenback against a basket of six major rivals, was last up 0.5 percent at 97.209. It is also charging banks negative interest of 0.4 percent on excess cash parked at the ECB. The FTSE 100 was little changed. Wall Street was poised for modest gains at the open with Dow futures and the broader S&P 500 futures up 0.1 percent.

- The yield on 10-year Treasuries rose three basis points to 2.2 percent.

All this is important because the monetary policies of the Federal Reserve and the European Central Bank now seem well underway to diverge further with the Fed definitively in a tightening mode and the ECB remaining in an easing mode.

Still, inflation is one of the weak points. West Texas Intermediate crude added 0.9 percent to $46.12 a barrel.

Japan released revised first-quarter data that showed Asia's second-largest economy expanded an annualized 1 percent, a significant drop from last month's initial 2.2 percent estimate, according to Kyodo News.