Dollar gains as report of dovish European Central Bank members dents euro

By Karen Brettell

NEW YORK (Reuters) - The euro fell against the dollar on Tuesday after reports that some European Central Bank policymakers think the bank’s economic projections are too optimistic.

Several ECB policymakers said the bank's economic projections are too rosy as weak growth in China and trade tensions linger, four sources with direct knowledge of discussions said.

The "significant minority" of rate-setters in last week’s policy meeting expressed doubt that a long projected growth recovery is coming in the second half of the year and some even questioned the accuracy of the ECB’s projection models, given their long history of downward revisions, the sources said.

“It’s yet another dovish take,” said Win Thin, global head of currency strategy at Brown Brothers Harriman in New York. “I think they are pushing back against the euro strengthening. It’s one of the few levers they have left.”

The release of Purchasing Managers Indexes (PMIs) for the manufacturing and service sectors in Europe on Thursday will be closely watched as traders look for signals of improving growth in the region.

The Australian dollar was little changed on the day after earlier weakening after the Reserve Bank of Australia said that a cut in interest rates would be "appropriate" should inflation stay low and unemployment trend higher.

Sterling also slipped after the Guardian newspaper reported that talks between Prime Minister Theresa May and the opposition Labour Party regarding Britain’s exit from the European Union had stalled. The Labour Party denied the report.

Traders are also waiting for Chinese gross domestic product data on Wednesday, which may indicate the worst is over for the global economy.

Chinese exports and credit data last week signalled some stabilization in economic conditions.

(Additional reporting by Tom Finn in London; Editing by Chizu Nomiyama)