Connect to share and comment

Euro under pressure in Asia after Fed minutes rally

PlacardEnlarge
(Globalpost/GlobalPost)

The euro was under pressure in Asian trade Friday on continued investor pessimism over Europe's prospects, while speculation over an end to US monetary easing added to the trend.

In midday Tokyo trade, the single currency bought $1.3205, edging up from $1.3188 in New York Thursday but well short of $1.3350 on Monday.

Investors have shunned the 17-nation euro after a leading eurozone growth indicator showed private business activity hit a two-month low in February.

"Weakness of the European and US data have boosted the yen and the dollar, while investors dumped European currencies," Barclays said in a note.

The euro had been firming in recent months on easing worries about the eurozone's prospects and its debt crisis.

But HiFX Senior Dealer Stuart Ive said the (euro/dollar) pair's upward trend appeared to be taking a breather.

"It will be interesting to watch what happens to the (EUR/USD), whether this is a blip out of the range or whether it is a turnaround in the euro and it consolidates maybe between 1.30 and 1.34 over the next few months," he said.

"The overall European situation is looking precarious in terms of growth," he added.

The dollar fetched 93.30 yen in Tokyo trade, compared with 93.11 yen in New York. Against the yen, the euro bought 123.22 yen from 122.81 yen.

The dollar gained sharply this week after minutes from a Federal Reserve meeting in January showed increasing sentiment for curtailing the US central bank's quantitative easing stimulus -- a move that could push up interest rates. Easing tends to weigh on a currency.

Dealers said the resurgent yen may return to its recent downward trend.

Currency markets will be keeping an eye on Japanese Prime Minister Shinzo Abe's meeting with US President Barack Obama, as well Fed chairman Ben Bernanke's testimony next week for hints about future policy moves, Citibank Japan chief forex strategist Osamu Takashima said.

Japan's conservative premier, whose Liberal Democratic Party swept national elections in December, arrived in Washington late Thursday with plans to discuss regional security issues as well as his economic and trade policies.

Traders were also watching for Abe's choice for the next governor of the Bank of Japan as the central bank's current chief Masaaki Shirakawa gets set to step down next month.

"But I don't think there will be too much of a big move no matter who is appointed," an options dealer at a major Japanese trust bank told Dow Jones Newswires.

si-hih/pb/jms

http://www.globalpost.com/dispatch/news/afp/130222/euro-under-pressure-asia-after-fed-minutes-rally