LONDON, Sept 3 (Reuters) – The dollar rally continued on Thursday as investors cut their bets against the greenback and sold euros on fears that the European Central Bank was concerned about its currency strengthening.
- The comeback has brought the greenback close to 1.3% over the 28-month low it hit on Tuesday against a basket of currencies.
- Few analysts expect the rally to last long, but if the widespread gains in the dollar seen during trading in Asia hold up through the session, it will be the first time since May that it has risen for three consecutive days.
- After the euro touched $ 1.20 earlier this week, concerns mounted in the market that the rise was too fast and strong for the ECB's taste. The fears intensified after a Financial Times report that confirmed those concerns.
- The ECB authorities would have warned that if the euro continues to appreciate, it will weigh on exports, weigh down prices and intensify pressure for greater monetary stimulus.
- The report followed comments on Tuesday by the ECB's chief economist, Philip Lane, who said the exchange rate “matters” for monetary policy.
- The euro fell 0.4% to $ 1.1812, after earlier in the session hit a one-week low of $ 1.1789.
- The dollar was up 0.3% against a basket of currencies at 92.99. The appreciation of the greenback put pressure on the British pound, which fell 0.7% to $ 1.3263, a six-day low, and the Norwegian krone, which fell 0.5% to 8.90 units per dollar.
- The Japanese currency was down 0.3% at 106.45 yen per dollar, a six-day low, while the Australian dollar was down 0.6% at US $ 0.7293.
(Reporting by Olga Cotaga; Edited in Spanish by Ricardo Figueroa)