Euro rises but stocks slip ahead of ECB rates meeting
The euro hit a four-week high against a weaker dollar today and stocks edged down ahead of a European Central Bank meeting at which no change in rates is expected although economic forecasts may be tweaked.
The ECB cut its main interest rate to a record low 0.5pc in May and is likely to sit tight as it waits for signs of the second-half economic recovery it has predicted.
That means the main focus will be President Mario Draghi's subsequent news conference, during which he is likely to be questioned on the future direction of policy.
"We think he (Draghi) will keep the door open for more easing but it's not the time to do it today," said Piet Lammens, a strategist at KBC in Brussels.
The stronger conviction that rates would not be cut following better economic data for May lifted the euro to $1.3127, its highest level since May 9 and up 0.2pc on the day. The euro's gains dragged the dollar index to a four-week low of 82.394.
A lack of surprises from the ECB, or an earlier Bank of England policy meeting, will see the market's focus quickly switch to Friday's US payrolls report, which could determine when the Federal Reserve begins tapering its bond buying.
Growing uncertainty over whether the Fed will roll back its stimulus this year has kept all markets on edge recently, causing Asian shares to slip to fresh 2013 lows on Thursday.
In Europe, the broad FTSEurofirst 300 index extended its 1.5pc fall of yesterday with a further loss of 0.1pc in early trade. However, the index remains up some 6pc in the year to date.
London's FTSE 100, and Frankfurt's DAX were also down 0.1pc.
In the fixed income market, German Bund futures were mostly steady before the ECB meeting with traders also watching Spanish and French bond auctions which are expected to meet good demand from yield-hungry investors but could see yields rise again.