Euro holds minor daily gains after ECB trims emergency support

By Karen Brettell

NEW YORK (Reuters) - The euro held onto small daily gains on Thursday after the European Central Bank said it will trim emergency bond purchases over the coming quarter, taking a first small step towards unwinding the emergency aid that has propped up the euro zone economy during the pandemic.

In the past two quarters, the bank has bought around 80 billion euros worth of debt each month. It provided no numerical guidance for the three months ahead, but analysts had predicted prior to the meeting that purchases would fall to between 60 billion and 70 billion euros in those months.

“The ECB is delivering mainly as expected today,” analysts at TD Securities said in a report on Thursday. “Looking ahead, the focus will be on how the ECB defines "moderately" - anything less than €60bn/mo could be bearish.”

The euro was last up 0.02% on the day at $1.1816, though trading was volatile after the ECB statement with the single currency bouncing between $1.1809 and $1.1842.

The ECB trod cautiously and flagged no other moves, notably how it ultimately plans to dismantle the 1.85-trillion-euro Pandemic Emergency Purchase Program (PEPP).

Investors are also focused on when the U.S. Federal Reserve is likely to begin paring bond purchases, though a move is unlikely to be announced until at least later in the year after a weaker than expected jobs report on Friday.

The August slowdown in job growth will not throw off the Fed's plans to reduce its asset purchases this year, four Fed officials said on Wednesday, though some cautioned a final decision requires more data.

Data on Thursday showed that the number of Americans filing new claims for jobless benefits fell last week to the lowest level in nearly 18 months, offering more evidence that job growth was being hindered by labor shortages rather than cooling demand for workers.

The dollar index was last down 0.14% at 92.53.

The index has recovered from one-month lows of 91.94 reached on Friday as Treasury yields rise. [US/]

Cryptocurrencies edged higher after large and sudden price drops on Tuesday.

Bitcoin gained 1.87% to $46,950 and ether rose 0.76% to $3,519.