Euro stays lower

The euro declined for the second straight day against the dollar on Thursday as investors pared back expectations Federal Reserve Chairman Ben Bernanke will hint at near-term monetary easing in a much-awaited speech on Friday. Currency moves were limited as investors were reluctant to place bets ahead of key events, which also include a European Central Bank policy meeting next Thursday, the US August jobs report next Friday and a Fed policy meeting on September 12-13.
Hopes for further easing had grown since Fed meeting minutes last week showed policymakers could act "fairly soon". The euro also gained after European Central Bank chief Mario Draghi cancelled his appearance at the Jackson Hole meeting on Friday, fuelling hopes the ECB will soon offer help to Spain and Italy.
Uncertainty is high and investors and economists have become far more sceptical that the Fed will announce a new round of bond purchases at its September meeting, according to Reuters polls over the last week. The sentiment was echoed in comments from Dennis Lockhart, the head of the Federal Reserve Bank of Atlanta, who told CNBC on Thursday it will be a "close call" when policymakers meet next month to decide whether to ease policy more.
"I think we're going to hear pretty much what we've heard from chairman Bernanke, which will probably be dollar positive," said Matthew Lifson, senior trader and analyst at Cambridge Mercantile Group in Princeton, New Jersey. The euro fell 0.1 percent to $1.2509 with the session low at $1.2486. It had earlier hit a session high of $1.2563, within sight of last week's high of $1.2589. A rise above that level would mark the euro's strongest level in eight weeks.
US economic numbers over the last two weeks have largely come in a little better than forecast. Data on Thursday showed US consumer spending rose by the most in five months, while the number of Americans filing new claims for jobless benefits was unchanged last week. Analysts said policymakers will also want to wait for August jobs data, which comes just ahead of the Fed's next policy meeting.
The dollar dipped 0.1 percent to 78.61 yen while the euro slipped 0.2 percent to 98.36 yen. Higher-yielding and commodity-linked currencies fell on concerns about a flagging Chinese economy, which would curb demand for commodities such as steel, iron ore and copper. The Australian dollar fell to a five week low. The Australian dollar was last down 0.4 percent at $1.0305.