FOREX-Euro grinds higher as traders look to ECB for direction

* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E
* Further euro gains depend on tone of ECB meeting
* Pound has been rattled by Brexit concerns
* Dollar traders looking at U.S. tech stocks for clues

By Stanley White
TOKYO, Sept 10 (Reuters) - The euro edged higher on Thursday
as traders braced for a European Central Bank meeting to gauge
policymakers' views on the common currency's recent appreciation
and its impact on inflation.
Sterling steadied above a six-week low but could lose more
ground due to growing concern that Britain and the European
Union will fail to agree a trade deal.
While markets expect the ECB to keep policy steady,
investors will closely watch President Christine Lagarde's
comments on how the euro's rise to a two-year high this month
affects the outlook for inflation and economic growth.
"The ECB is this week's biggest event by far and there is a
lot at stake," said Masaru Ishibashi, joint general manager of
trading at Sumitomo Mitsui Banking Corp.
"Most recently, the ECB downplayed inflation, but I want to
see how Lagarde will approach this in her press conference. This
will determine which way the euro goes."
The euro EUR=D3 bought $1.1821, holding onto a 0.3% gain
from the previous session.
The British pound GBP=D3 traded at $1.2993, recovering
slightly from a dip to a six-week low of $1.2839 on Wednesday.
The pound EURGBP=D3 fell to 90.98 pence per euro,
approaching a six-week low.
Sentiment for cable has taken a hit after Britain unveiled
draft legislation that analysts say raises the possibility of it
exiting the EU single market in four months time with no trade
agreement in place. The dollar held steady against the safe-harbour Swiss franc
CHF=EBS at 0.9116 and was little changed at 106.11 yen
JPY=D3 .
The euro got a boost on Wednesday after Bloomberg News
reported that ECB officials are growing more confident in the
bloc's economic outlook.
However, traders may be reluctant to push the common
currency much further before the ECB meeting due to earlier
media reports that officials are growing uncomfortable with the
euro's almost 6% appreciation against the dollar from its June
low.
The ECB's views are also in the spotlight after euro-zone
consumer prices turned lower in August for the first time since
2016, and the U.S. Federal Reserve switched to focusing on
average inflation.
"It's possible that the ECB could try to out-dove the Fed if
the euro appreciation goes too far, but whether that will be
done via shifting to average inflation targeting or other means
is hard to say," Aidan Yao, senior emerging Asia economist at
AXA Investment Managers in Hong Kong, told the Reuters Global
Markets Forum.
With no major economic data scheduled during Asian trading,
market moves were subdued as investors wait for potential ECB
catalysts.
Traders in the dollar are closely watching global equities
because a rebound in U.S. tech shares from a rapid sell-off
boosted Asian stocks, suggesting an improvement in risk
appetite.
The dollar index =USD against a basket of six major
currencies was steady at 93.172.
Elsewhere, the Australian dollar AUD=D3 fell to $0.7268
amid concerns abound worsening diplomatic ties with China over
the treatment of the two countries' journalists. Investors are also nervously monitoring an outbreak of
coronavirus infections in the state of Victoria.
Across the Tasman Sea, the New Zealand dollar NZD=D3 eased
slightly to $0.6681.