* German Ifo business survey unchanged in October
* Ifo chief economist sees small expansion in Germany
* ECB survey, comments defend recent central bank policy
easing
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
(Recasts, adds new context and news, updates prices)
By Olga Cotaga
LONDON, Oct 25 (Reuters) - The euro was up slightly Friday
after a survey revealed German business morale held steady in
October, though levels were not far from the one-week low it
fell to Thursday on the European Central Bank leaving the door
open for more policy easing.
Germany, Europe's largest economy, is stabilising after
contracting earlier in the year, a survey conducted by
Germany's Ifo institute showed on Friday. Its chief economist also forecast that the German economy
was likely to expand slightly in the fourth quarter.
On the other hand, euro zone inflation and growth
expectations have continued to fall, a key ECB survey showed on
Friday, providing further justification for its latest stimulus
package. Moreover, Governing Council member Pierre Wunsch said on
Friday that a recent string of dismal economic indicators
justified the ECB's move last month to provide more stimulus.
The ECB cut the key interest rate to -0.50% and announced a
new wave of bond purchases in September. But outgoing President
Mario Draghi highlighted the importance of accomodative fiscal
policy in the euro area, which together with ECB's quantitative
easing programme should have a much stronger impact on the euro
zone's potential recovery.
Other ECB members have mirrored that view.
ECB Governing Council member Bostjan Vasle said on Friday
that euro zone countries should introduce structural and fiscal
measures that would improve their growth potential. IN FOCUS
The focus will shift next week to a U.S. Federal Reserve
meeting ending Oct. 30 and a Bank of Japan meeting ending Oct.
31. The Fed is expected to cut interest rates for a third time
this year, but money markets have largely priced in a 25 basis
points cut already, according to Refinitiv data.
"It should be a done deal," said Richard Falkenhall, senior
currency strategist at SEB.
Therefore, the central bank meetings next week are "not
going to move markets very much," Falkenhall said. "I don't
think it will have a major impact on euro/dollar," he added.
The BOJ is leaning towards keeping policy on hold next week,
but the decision is a close call as policymakers struggle with
the fallout from the U.S.-China trade war. The euro, together with other major currencies, looks
destined to remain in a narrow trading range in the near future,
keeping volatility down, the only trend in the otherwise
trendless forex market, analysts said.
The common currency rose 0.1% to $1.1119 EUR=EBS , though
was not far from the one-week low of $1.1094 it reached on
Thursday. The index which tracks the dollar against six major
currencies .DXY was flat at 97.63.
The Swedish crown too was in neutral territory, last trading
at 10.72 against the euro EURSEK=D3 . On Thursday, however, the
Swedish currency jumped to a one-month high after the Riksbank
cemented hopes of an interest rate increase to 0% in December.
Still, the Riksbank, which apart from the Norges Bank, is
the only central bank in the developed world raising interest
rates, did not forecast another rate rise after December.
"It seems like things are getting really really boring in
the FX markets," said Falkenhall. "The FX market will be a
zombie market."
Traders will be watching next the U.S. University of
Michigan consumer sentiment index, due at 1400 GMT. Economists
polled by Reuters expect the index to remain steady at 96 in
October.