FOREX-Euro dips on reports ECB chief to leave, kiwi slumps as RBNZ takes easy stance

By Samuel Indyk and Rocky Swift

LONDON, Feb 18 (Reuters) - The euro dipped slightly on Wednesday after a report that European Central Bank President Christine Lagarde planned to leave her role early, while the dollar was higher before the minutes from the Federal Reserve's January meeting.

The kiwi dollar slumped after the Reserve Bank of New Zealand held pat on rates and said policy would need to remain accommodative, while the yen was a touch softer after the U.S. said Japan was financing three infrastructure projects.

The Financial Times reported that Lagarde planned to leave her job before the end of her term in October 2027, although the central bank said that no decision had been taken regarding the end of her term.

"I don't think it's going to make a lot of difference for the euro for the time being because there are still many things that need to be discussed," said Chris Turner, global head of markets at ING.

Possible candidates to lead the ECB include former Dutch central bank chief Klaas Knot, Bank for International Settlements General Manager Pablo Hernandez de Cos and Bundesbank chief Joachim Nagel.

The euro EUR=EBS fell slightly, last down less than 0.2% at $1.1831, as the impact on near-term policymaking from any change was likely to be limited.

Lagarde assumed office in 2019 and has been at the helm through the aggressive tightening cycle in 2022 and 2023 to bring inflation under control. But with inflation now back close to the ECB's target and interest rates expected to remain on hold through 2026, Lagarde could be leaving the ECB at a relatively tranquil time.

FED MINUTES, GEOPOLITICS IN FOCUS

With many markets in Asia closed for Lunar New Year holidays and the European economic calendar thin, investors were looking ahead to the Fed's minutes from its January meeting and other key U.S. economic data for trading catalysts.

The Fed left rates unchanged last month, pausing after three rate cuts in the three prior meetings. The minutes will likely reiterate that the Fed remains well-positioned to assess whether another rate cut is needed.

"We're seeing a bit of dollar strength in context of the FOMC minutes, durable goods, and maybe just squaring up some shorts ahead of that," IG market analyst Tony Sycamore said. "But I just feel like we're in a bit of a holding pattern."

The dollar index =USD, which measures the greenback against a basket of currencies, rose 0.2% to 97.27, extending its advance to three days.

Focus also remains on the geopolitical situation, with Iran and the U.S. reaching an understanding on the main "guiding principles" in a second round of indirect talks over their nuclear dispute on Tuesday, although a deal is not imminent, Iranian Foreign Minister Abbas Araqchi said.

Elsewhere in Geneva, negotiators from Ukraine and Russia concluded the first of two days of U.S.-mediated peace talks, with Trump pressing Kyiv to act fast to reach a deal to end the four-year conflict.

YEN SOFT, KIWI SLUMPS

The Japanese yen JPY= was weaker on Wednesday at 153.73 per dollar. It rose almost 3% last week, its biggest rise against the dollar in almost 15 months.

The Trump administration announced three projects valued at $36 billion to be financed by Japan, the first of some $550 billion in projects Tokyo agreed to undertake in order to lower U.S. tariffs.

"There was perhaps a view that these investments were never going to materialise but it looks like there are real projects," ING's Turner said.

"Investors are saying that if there is going to be a lot of direct investment into the U.S. from Japan, it could provide some support to dollar-yen."

Elsewhere, the kiwi NZD= slumped 0.8% to $0.6001 after the Reserve Bank of New Zealand held its key rate unchanged at 2.25% in its first meeting chaired by Governor Anna Breman.

Policymakers said the monetary stance needs to stay accommodative to support the economic recovery.

The Australian dollar AUD= weakened 0.2% to $0.7070, while the pound was steady at $1.3564 after mixed inflation figures that showed an easing in headline consumer prices but stubborn services inflation.