* Dollar and other safe havens lag as stocks hit records
* ECB policy decision at 1245 GMT
* Lagarde expected to keep rates on hold
* Graphic: World FX rates https://tmsnrt.rs/2RBWI5E
By Julien Ponthus
LONDON, Jan 21 (Reuters) - The euro ticked higher before a
meeting of the European Central Bank on Thursday, with the
dollar declining versus major peers as plans for a massive U.S.
stimulus package fuelled market optimism and sapped demand for
safe-haven currencies.
Stock markets reached record highs on Wall Street and in
Asia following the inauguration of Joe Biden, amid hopes the
46th president of the United States would secure a $1.9 trillion
package to prop up the COVID-19 hit economy.
The dollar index =USD slipped 0.2% to 90.240, declining
for a third day after touching a nearly one-month high of 90.956
on Monday.
The euro gained 0.2%, reversing a similar decline from the
previous session, to trade at $1.2134 EUR=EBS about four hours
before the ECB's policy announcement at 1245 GMT.
"We don't expect many fireworks from the European Central
Bank meeting", ING strategists said, foreseeing "a fairly
uneventful day for the euro".
Many analysts expect the dollar to continue its downtrend
trend, which saw it lose nearly 7% in 2020 amid ultra-loose U.S.
monetary policy and hopes for a post-pandemic global recovery.
"While the idiosyncratic euro story remains unexciting (the
eurozone will not outperform the U.S. economy this year and any
ECB policy normalisation is a very distant story), we expect the
bearish dollar dynamics to dominate", the ING strategists said.
The dollar also lost 0.1% at 103.505 yen JPY=EBS on
Thursday, after dipping to a two-week low of 103.33.
The Bank of Japan kept monetary policy unchanged on Thursday
while revising up its economic forecast for next fiscal year.
Norway's central bank left its key policy interest rate at a
record-low zero percent on Thursday, as expected, and said the
economy was developing largely as anticipated Norges Bank has said it plans to raise rates early next year
as the economy recovers from the coronavirus pandemic, which
could making it the first among G10 central banks to raise the
cost of borrowing.
The Aussie dollar AUD=D4 rose 0.2% to 77.62 U.S. cents,
adding to a 0.7% rally in the previous session. Australia
boasted another solid rise in employment in December, data
released Thursday showed. The U.S. currency slipped against the Canadian dollar, down
0.13% to C$1.2618 CAD=D4 after the Bank of Canada opted not to
cut interest rates.
The central bank said on Wednesday that the arrival of a
COVID-19 vaccine and stronger foreign demand is brightening the
economic outlook in the medium term, opting to hold its key
overnight interest rate at 0.25%.
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World FX rates https://tmsnrt.rs/2RBWI5E
TAKE A LOOK-U.S. Inauguration Day - Biden to take office as U.S.
president ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>