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Euro retreats on dovish comments from ECB’s Draghi

Mario Draghi, President of the European Central Bank, ECB in Frankfurt/AFP

Mario Draghi, President of the European Central Bank, ECB in Frankfurt/AFP

NEW YORK, April 3- The euro Thursday retreated against the dollar and the yen after the head of the European Central Bank signaled he would act aggressively to ward off deflation if conditions warrant.

Near 2200 GMT, the euro bought $1.3717, down from $1.3765 late Wednesday.

The euro slipped to 142.61 yen from 142.96 of the Japanese currency.

The dollar advanced to 103.94 yen from 103.85.

Currency traders kept attention squarely on Frankfurt, where the ECB, as expected, kept its central “refi” or refinancing rate unchanged at 0.25 percent at its monthly policy meeting.

However, the euro retreated following a news conference with ECB President Mario Draghi, who vowed to “act swiftly” if needed to keep deflation at bay.

“We will monitor developments very closely and will consider all instruments available to us. We are resolute in our determination to maintain a high degree of monetary accommodation and to act swiftly if required,” Draghi said.

BK Asset Management managing director Kathy Lien said Draghi was “unusually specific in saying that quantitative easing, another rate cut, negative deposit rates and a narrower rate corridor were all discussed at the meeting.”

The comments “tell us that there’s no question that the ECB’s primary goal today was to harden their dovish bias,” Lien said.

Lien said traders Friday will be especially focused on the US Department of Labor’s monthly jobs report.

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An increase of more than 225,000 net new jobs in March would boost the dollar, while the greenback would fall if the report shows fewer than 150,000 new jobs, she said.

Among other currencies, the British pound fell to $1.6597 from $1.6622 Wednesday.

The dollar advanced to 0.8909 Swiss franc from 0.8866.

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