* Dollar, Japanese yen trading flat
* Sterling falls on expectations of general election in UK
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
By Olga Cotaga
LONDON, Oct 25 (Reuters) - The euro steadied on Friday after
falling to a one-week low against the U.S. dollar in the
previous session on the European Central Bank leaving the door
open for more monetary policy easing, but keeping interest rates
unchanged.
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 euro was last flat at $1.1109 EUR=EBS , though close to
the one-week low of $1.1094 it reached on Thursday. The index
which tracks the dollar against six major currencies .DXY was
also flat at 97.66.
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 for the German Ifo business climate
survey, due at 0800 GMT, and for the U.S. University of Michigan
consumer sentiment index, due at 1400 GMT.
Economists polled by Reuters expect the Ifo survey to have
slipped slightly to 94.5 in October from 94.6 in September.
Elsewhere, the pound nursed losses versus the dollar and the
euro on Friday after Prime Minister Boris Johnson's call for an
election heightened uncertainty over Britain's divorce from the
European Union.
The British currency is likely to remain fragile ahead of a
meeting later on Friday where European Union officials may
decide how long they will extend Britain's deadline to leave the
EU beyond the current date of Oct. 31. At this stage, an election looks unlikely because the main
opposition Labour Party has withheld its support and other
opposition parties have rejected the offer. Sterling was last down 0.2% at $1.2835 GBP=D3 , having
slipped below %1.28 to a one-week low of $1.2790 on Thursday.
Against the euro, the pound fell 0.2% to 86.55 pence
EURGBP=D3 .