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Dollar holds steady after ECB leaves rates alone, tariffs and Fed in focus
By Alden Bentley and Stefano Rebaudo
(Reuters) -The dollar traded sideways against the euro on Thursday after the European Central Bank held rates steady, and was wedged between prospects for higher Japanese rates that supported the yen and worries about political risk after Sunday’s elections.
The European Central Bank left interest rates steady at 2%, as expected, on Thursday, taking a break after a year of policy easing to wait for clarity over Europe’s future trade relations with the United States.
"The view that the ECB is probably on hold here is probably gaining a bit more traction. We’ve trimmed expectations for the cuts in September to certainly less than 50/50," said Shaun Osborne, chief foreign exchange strategist at Scotiabank (TSX:BNS) in Toronto.
The Japanese central bank’s deputy governor, Shinichi Uchida, said Tuesday’s trade deal with Washington had reduced economic uncertainty, comments that fuelled optimism in the market about the potential resumption of interest rate hikes.
Analysts believe the yen will face persistent headwinds after Sunday’s upper house election, with the opposition considering a no-confidence motion.
The European Union is nearing a deal that would impose a broad 15% tariff on EU goods, diplomats said. The rate, which could also extend to cars, would mirror the framework agreement the United States struck with Japan.