The euro, German bonds and shares steadied on Thursday, as investors awaited the European Central Bank's policy meeting later in the day and President Mario Draghi's views on the region's growth prospects. Testimony from the new head of the Bank of England, bond auctions from France and Spain, earnings reports from a host of major European companies and the start of a two-day European Union summit provide more reasons for investors to be cautious. The euro was nearly flat at $1.3530, holding above this week's low of $1.3458 plumbed on Tuesday but well shy of a 15-month peak of $1.3711 set last Friday. The common currency has now soared 20% against Japan's yen in just three months, risen 8% on sterling and 7% on the dollar, increasing tensions among policymakers across the recession-hit region. The gains will put the spotlight on ECB president Draghi at his 1330 GMT news conference, which follows the bank's meeting, at which interest rates are not expected to be changed. "The market will want to hear stronger words on the foreign exchange front to stop the upwards trend that's in place, but we doubt this will happen," said Nomura economist Nick Matthews. Equity markets were being held in check ahead of the news conference, with the FTSEurofirst 300 index index of top European shares, London's FTSE 100, Paris's CAC-40 and Frankfurt's DAX all little changed in early trading. "The medium and long-term positive trend is still intact, although on the short term, we're turning 'neutral'; indexes are very close to key support levels," said Aurel BGC chartist Gerard Sagnier. German Bund futures reflected the cautious mood, edging up 5 ticks to 142.61, with early attention on a Spanish auction of up to 4.5 billion euros of new debt following a rise in political tensions in Madrid as a corruption scandal threatens to engulf prime minister Mariano Rajoy. Brent crude was steady in a tight range around $117 per barrel, while gold inched up to about $1,680 an ounce, with traders in all commodity markets wary of the impact of Draghi's comments on the outlook for the euro.
World shares, euro pause ahead of ECB decision
The euro was nearly flat at $1.3530, holding above this week's low of $1.3458 plumbed on Tuesday