Euro stung by weaker data ahead of Draghi's ECB swansong
By Sujata Rao and Elizabeth Howcroft
LONDON, Oct 24 (Reuters) - The euro erased its earlier gains on Thursday after business surveys pointed to stagnating economic momentum in the euro zone, while the Swedish crown rallied after its central bank stuck to its plan for a December interest rate hike.
In a busy day for central banks, European Central Bank President Mario Draghi holds his final press conference after the rate decision, which is due at 1145 GMT.
While no major announcements are expected and rates are set to be left unchanged, investors will be closely watching the news conference for any reference to a rift among policymakers about stimulus plans designed to reinvigorate the economy.
The weakness of the region was reaffirmed on Thursday when IHS Markit's flash composite PMI for October, seen as a good guide to economic health, remained perilously close to the 50 mark that separates growth from contraction and below forecasts.
The euro gave up earlier gains, particularly after a weaker earlier German reading of the Purchasing Managers' Index, and was last flat on the day at $1.1129 EUR=EBS, having earlier traded at $1.1163.
The dollar index was flat on the day at 97.494 .DXY.
"Today is going to be all about the ECB," said Rabobank FX strategist Piotr Matys. "We don't expect the ECB to change the parameters of its monetary policy," but Draghi may use his last meeting to encourage governments to use fiscal measures to propel growth.
A trio of central bank meetings were being held on Thursday, including the ECB, the Swedish Riksbank and Norway's Norges bank.
The Swedish crown rose to its strongest against the dollar since mid-August and gained 0.6% against the euro after the Riksbank stuck to its plan for raising rates in December, though it said the rate path after that was not yet clear. SEK=D3, EURSEK=D3 It kept rates steady at -0.25%.
The Norwegian crown slipped 0.1% against the euro as the Norges Bank said rates were likely to be held at the current 1.5% rate. EURNOK=D3. The decline was contained by the Swedish crown's rise. The Norwegian currency gained 0.1% versus the dollar NOK=D3.
"We don't think that the SEK gains will last for long, because this interest rate increase may be interpreted by the market as a policy rate mistake," said Petr Krpata, chief EMEA FX strategist and IR strategist at ING, suggesting the bank may be "hiking into a downturn".
Krpata noted that the Norwegian crown strengthened in line with the Swedish crown, meaning that its strength is "spillover from the Riksbank decision".
The Norwegian crown recently reached a record low to the euro and an 18-year low to the dollar despite rate hikes this year.
Most Asian currencies edged up in the absence of developments in the Sino-U.S. trade war.
The Australian dollar was down 0.2% AUD=D3 versus the U.S. dollar and the New Zealand dollar fell as much as 0.4% NZD=D3.
The pound weakened 0.2% to $1.2893, having chalked up 6% gains since Irish and British leaders said they could "see a possible pathway to a deal" on Oct. 10. GBP=D3.
(Additional reporting by Tommy Wilkes Editing by Larry King and Toby Chopra)
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