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Dollar, euro under pressure in Asia

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(Globalpost/GlobalPost)

The dollar and euro came under pressure in Asia Thursday as political turmoil in Portugal and Egypt sent investors to the safe-haven yen, ahead of a European Central bank meeting later in the day.

In morning Tokyo trade, the greenback fetched 99.81 yen from 99.86 yen in New York and well down from 100.66 yen in afternoon Tokyo trade on Wednesday.

The euro also slipped to 129.71 yen from 129.93 yen in new York, while it fell to $1.2992 from $1.3010.

"Risk aversion looks set to creep higher as the worrying political situation in Portugal and the elevated unease in Egypt dent market sentiment," Credit Agricole said.

"Attention will for now turn to Europe where the ECB (European Central Bank) and BoE (Bank of England) will hold their policy meetings today. We expect both of them to remain on hold."

Portugal's centre-right coalition government was locked in crisis Wednesday after the resignation of two ministers over its bailout reforms. In Egypt, the army toppled Islamist president Mohamed Morsi, detaining him and his top aides following massive street protests.

The ECB was widely expected to reassure markets that it has no plans to start raising interest rates when its policy-setting committee meets later in the day.

"The ECB is highly unlikely to respond to the latest bout of financial stress triggered by a political crisis in Portugal, at least for now, and as long as this does not turn into full-blown panic," Credit Agricole said.

Markets are already on edge over when the US Federal Reserve will start winding down its $85 billion-a-month asset-purchase stimulus programme, known as quantitative easing.

The Fed has said it will reel in the scheme, credited with propping up global equity markets, in the coming months if the world's biggest economy continues to show improvement.

Two sets of US jobs figures on Wednesday -- a rise in private-sector hiring and a fall in weekly claims for unemployment benefits -- bolstered expectations a closely watched US jobs report for June out on Friday will show modest growth.

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http://www.globalpost.com/dispatch/news/afp/130704/dollar-euro-under-pressure-asia