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Euro bounces back in Asian trade

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(Globalpost/GlobalPost)

The euro clawed back ground in Asia on Thursday after the latest pledge from the European Central Bank that it will keep its loose monetary policy in place sent the unit plunging in New York.

In Tokyo afternoon trade, the single currency fetched $1.3031 from $1.3007 late Wednesday in New York, while it also edged up to 127.41 yen from 127.24 yen.

The dollar bought 97.73 yen from 97.82 yen, after a downward revision of first-quarter US growth fuelled speculation the Federal Reserve would delay plans to wind down its massive stimulus programme.

European Central Bank (ECB) President Mario Draghi told a French parliamentary commission that its policy would remain accommodative for the foreseeable future.

The comment followed similar remarks from Draghi and other ECB officials in recent days as the 17-nation bloc struggles to pull itself out of recession.

"There's just no reason to own the euro at this point," Ken Jakubzak, head of KMJ Capital, told Dow Jones Newswires. "There are some major problems which don't appear to be going away, and at the same time, very little hope for growth."

Markets will be looking to a string of eurozone data later in the day, including French consumer confidence, Spanish retail sales, and German unemployment, dealers said.

On Wednesday, the US Commerce Department said the world's biggest economy grew only 1.8 percent in the first quarter, in a sharp downward revision from the previous estimate of 2.4 percent.

Personal spending was lower than previously estimated, and both exports and imports declined in the January-March period.

The figures raised hopes that the Fed would hold off an expected wind-down of its bond-buying scheme, known as quantitative easing, later this year.

The stimulus, aimed at stoking growth in the US economy, has been credited with propping up global equity markets.

The yen is expected to lose ground as Japanese Prime Minister Shinzo Abe's government heads into upper house parliamentary elections that are widely expected to solidify his power base.

That would allow him to continue a drastic economy-boosting plan, dubbed Abenomics, which has pushed the yen into a sharp decline since last year.

"The yen will resume a weaker trend although markets may wait until the ... elections on July 21 and fresh reform news before pushing it much weaker," Credit Agricole said.

The dollar was mixed against other Asia-Pacific currencies.

It weakened to Sg$1.2687 from Sg$1.2715 the previous day, to 43.31 Philippine pesos from 43.34 pesos and to Tw$30.02 from Tw$30.08.

The greenback also slipped to 9,995 Indonesian rupiah from 10,007 rupiah.

It rose to 31.11 Thai baht from 31.07 baht and to 60.45 Indian rupees from 59.86 rupees.

The Australian dollar was up at 93.12 US cents from 92.66 cents while the Chinese yuan changed hands at 15.90 yen against 15.84 yen.

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http://www.globalpost.com/dispatch/news/afp/130627/euro-bounces-back-asian-trade-0