* Euro heading towards 28-month low after ECB action
* Trump's delay to scheduled tariff hike boosts markets
* China's offshore yuan gains 0.5%, Aussie hits 6-wk high
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
(Updates after ECB announcement)
By Tommy Wilkes
LONDON, Sept 12 (Reuters) - The euro skidded below $1.10 on
Thursday after the European Central Bank cut interest rates and
unexpectedly relaunched a quantitative easing programme as well
to boost the region's economy.
Investors had expected a rate cut at Thursday's meeting but
there was some uncertainty as to whether policymakers would
restart a QE programme after some ECB members expressed doubt in
recent weeks about the need to relaunch asset purchases.
The euro, after initially rising, dropped sharply to as low
as $1.0955 EUR=EBS , the day's low and down 0.5% on the
session, as investors digested news of the rate cut and relaunch
of QE. The euro hit a 28-month low earlier this month of
$1.0926.
The single currency also weakened against the Swiss franc
EURCHF=EBS and Japanese yen EURJPY=EBS .
ECB President Mario Draghi gives his press conference at
1230 GMT, where investors will be looking for signals of further
rate cuts and whether policymakers plan to tweak their inflation
targeting framework.
Thursday's meeting was the first in a series of major
central bank events, with Federal Reserve and Bank of Japan
meetings next week.
Stephen Gallo, European Head of FX Strategy at BMO Capital
Markets, said that if the ECB prepared the market for
significant rate cuts ahead, "that would be quite dovish, quite
bearish" for the euro.
Euro/dollar overnight implied volatility had soared to its
highest since mid-2018 EURONO= in the run-up to Thursday's
policy statement.
The dollar rose against a basket of currencies and was last
up 0.2% at 98.568 .DXY .
RISK RALLY
Elsewhere in forex markets, a rebound in risk sentiment
supported the Chinese yuan CNY= , Australian dollar AUD= ,
export-driven currencies across Asia and emerging market
currencies .MIEM00000CUS .
After a difficult August in which concerns about a global
recession sparked a scramble into safer assets, markets have
rallied this month, encouraged by easing trade tensions and by
receding fears of a no-deal Brexit for now.
China on Wednesday exempted a basket of U.S. goods from its
tariffs, while U.S. President Donald Trump said in a tweet he
would delay a scheduled tariff hike by two weeks in October.
The Aussie hit a six-week high of $0.6887 AUD=D3 and the
offshore Chinese yuan rose as much as 0.5% CNH=EBS to a
three-week high of 7.0737 per dollar. The Japanese yen, the go-to safe haven currency for fearful
investors, fell to a six-week low against the dollar. The yen
breached the 108 mark in Asian trade and was last at 107.80 yen
per dollar JPY=EBS .
It had hit a seven-month high of 104.46 last month.
Sterling was little changed GBP=D3 EURGBP=D3 . The pound
rocketed to a six-week high against the dollar on Monday as
investors welcomed the British parliament's move to block a
no-deal Brexit on Oct. 31.
Despite the more positive mood in risk assets this week,
analysts expressed caution about its sustainability.
"The bigger picture is one of a very tense geopolitical
environment that is unlikely to be rectified quickly," BMO's
Gallo said.
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China's offshore yuan vs dollar https://tmsnrt.rs/2AbkJJF
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(Editing by Hugh Lawson/Gareth Jones/Susan Fenton)