By Anneken Tappe, MarketWatch
Major currencies traded in a tight range on Thursday, struggling for drivers.
The euro slipped earlier in the session, after European Central Bank President Mario Draghi sounded more downbeat than expected in the central bank’s last news conference of the year.
The ECB left interest rates unchanged, as expected, and confirmed it would wind down its quantitative easing efforts at the end of the month. The central bank has said it won’t raise its benchmark rates until next summer at the earliest and investors generally expect it to keep rates on hold beyond that date. Draghi said the outlook for the eurozone was “broadly balanced,” but that risks were shifting to the “downside.”
“The slightly dovish tone of the update put pressure on the single currency,” said David Madden, market analyst at CMC Markets.
The euro /zigman2/quotes/210561242/realtime/sampled EURUSD +0.0338% was last little changed at $1.1365.
In other European developments, Italy's Prime Minister Giuseppe Conte said Rome was targeting a budget deficit of around 2% next year, rather than 2.4% as initially proposed. This could mean that Italy will avoid additional scrutiny in form of an excessive deficit procedure by the EU.
Meanwhile, President Donald Trump said he hoped the Federal Reserve would not raise interest rates any more. The Fed is due for its December monetary policy update next week and is expected to hike rates by 25 basis points for a fourth and final time this year. Trump has repeatedly criticized the Fed for tightening policy.
The ICE U.S. Dollar Index /zigman2/quotes/210598269/delayed DXY -0.07% was little changed, hovering in the green at 97.077.
A row between China and Canada deepened after two Canadian citizens were arrested in China, following the arrest of Meng Wanzhou, chief financial officer of Chinese telecommunications firm Huawei, in Canada by request of the U.S. Meng has since been released on bail. The arrest spooked markets expectations of a U.S.-China trade deal. Trump since said he could step in regarding Meng’s arrest if it should help U.S.-China trade relations.
The Canadian dollar /zigman2/quotes/210561978/realtime/sampled USDCAD -0.0304% was hardly changed versus its U.S. rival in the wake of the headlines, with the greenback buying C$1.3358.
In the U.K., the British pound /zigman2/quotes/210561263/realtime/sampled GBPUSD -0.1464% also traded in a relatively tight range, mostly in positive territory, last buying $1.2651 compared with $1.2628 late Wednesday in New York.
The U.K. currency rallied on the back of support for Prime Minister Theresa May on Wednesday. The premier survived a vote of no-confidence, remaining as leader of her party. The opposition Labor party can still call a vote on the whole government.
May “continues to face a monumental task of trying to pass her [Brexit] deal through Parliament, but with the vote [on her plan] now delayed until mid-January, she has time to wrong further concessions from the European Union,” said Boris Schlossberg, managing director of FX strategy at BK Asset Management. The deal May agreed with the EU in November had been criticized for giving too much leeway to Brussels and not safeguarding the U.K.’s sovereignty enough. A particular sticking point was the treatment of the Northern Ireland-Ireland border.
The government of French President Emmanuel Macron faced and won a vote of no-confidence on Thursday, after opposition parties brought a motion following intense protests against fuel tax hikes and carbon taxes on the streets of France.