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Forex - Euro hits fresh 6-week lows as ECB holds, Draghi awaited

ForexJul 16, 2015 07:58AM ET
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© Reuters. Euro falls to six-week lows ahead of ECB press conference - The euro fell to fresh six-week lows against the dollar on Thursday after the European Central Bank left monetary policy across the euro zone unchanged, as investors awaited comments by President Mario Draghi later in the day.

EUR/USD hit lows of 1.0879, the weakest since May 27 and was last at 1.0882, down 0.62% for the day.

The ECB maintained its benchmark interest rate at a record-low 0.05%, in line with market expectations.

The central bank also held its marginal lending at 0.30% and left its deposit facility rate unchanged at minus 0.20%.

Investors were waiting to see whether the ECB will increase Emergency Liquidity Assistance to Greek banks, the first step toward allowing them to reopen after being closed for nearly three weeks.

Greece’s parliament on Wednesday voted to accept harsh austerity measures demanded by the country’s creditors in order to secure a third bailout package.

The vote cleared the way for negotiations on a third bailout package to begin, but also raised doubts over the future of Greek Prime Minister Alexis Tsipras' government after many lawmakers in his left-wing Syriza party voted against the deal.

Ahead of the Greek vote on Wednesday night, the French national assembly voted overwhelmingly in favor of starting negotiations for the third bailout. Germany’s Bundestag is set to vote on the plan on Friday.

Meanwhile, officials in Brussels were continuing efforts to assemble a €7 billion short-term financing package to keep Greece afloat until the new bailout can be finalized.

The single currency slid to one-week lows against the yen, with EUR/JPY down 0.41% to 134.95 and hit an eight-year trough against the pound, with EUR/GBP hitting lows of 0.6969.

Demand for the dollar continued to be underpinned as the diminished threat of a Greek exit from the euro zone removed a potential obstacle from Federal Reserve plans to tighten monetary policy.

Fed Chair Janet Yellen reiterated Wednesday that the central bank was on track to raise interest rates by the end of the year if the economy continues to evolve as expected.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.51% to six-week peaks of 97.78.

Forex - Euro hits fresh 6-week lows as ECB holds, Draghi awaited

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