Euro weak ahead of European Central Bank meeting

AFP, TOKYO: The euro yesterday hovered around seven-month lows on the dollar and was also weak against Asian currencies on speculation that the European Central Bank will unleash fresh stimulus measures next week.
Further action by the ECB to boost the 19-nation eurozone economy was likely to heap pressure on Asian policymakers to loosen monetary policy in a bid to push down their units to stay competitive, analysts said.
The common currency declined against the yen Friday, while it has also lost ground in recent days against the South Korean won and Singapore dollar among other emerging units.
"(Asian) currencies don't look that cheap," Mitul Kotecha, head of Asian foreign-exchange and interest-rate strategy at Barclays in Singapore, told Bloomberg News.
"When you look at real-effective rates, they haven't weakened significantly. That's why there's probably still more room for further depreciation."
Speculation that the ECB will announce further measures at its policy meeting next Thursday have also revived expectations that the euro may soon hit parity with the dollar for the first time since 2002.
On Friday, the euro weakened to $1.0617 and 130.02 yen from $1.0622 and 130.18 yen in Asian trade Thursday.
The dollar, meanwhile, weakened to 122.47 yen on Friday from 122.56 yen in Tokyo the previous day.
However, the greenback has been on the rise as the US Federal Reserve appears set to go in the opposite direction from ECB and Bank of Japan policymakers by raising interest rates as early as next month.
"While moves in the USD hold the key for all risk assets, this will largely be driven
by the implied probability of a December
rate hike from the Federal Reserve," Chris Weston, chief market strategist at IG Ltd, said in a client note.
The dollar gained against a string of emerging currencies, rising 0.49 percent against the won, 0.47 percent against Malaysia's ringgit, 0.23 against Thailand's baht, and 0.25 percent against the Taiwan dollar. It also advanced against the Singapore dollar.

 

Euro weak ahead of European Central Bank meeting

AFP, TOKYO: The euro yesterday hovered around seven-month lows on the dollar and was also weak against Asian currencies on speculation that the European Central Bank will unleash fresh stimulus measures next week. Further action by the ECB to boost the 19-nation eurozone economy was likely to heap pressure on Asian policymakers to loosen monetary policy in a bid to push down their units to stay competitive, analysts said. The common currency declined against the yen Friday, while it has also lost ground in recent days against the South Korean won and Singapore dollar among other emerging units. (Asian) currencies dont look that cheap, Mitul Kotecha, head of Asian foreign-exchange and interest-rate strategy at Barclays in Singapore, told Bloomberg News. When you look at real-effective rates, they havent weakened significantly. Thats why theres probably still more room for further depreciation. Speculation that the ECB will announce further measures at its policy meeting next Thursday have also revived expectations that the euro may soon hit parity with the dollar for the first time since 2002. On Friday, the euro weakened to $1.0617 and 130.02 yen from $1.0622 and 130.18 yen in Asian trade Thursday. The dollar, meanwhile, weakened to 122.47 yen on Friday from 122.56 yen in Tokyo the previous day. However, the greenback has been on the rise as the US Federal Reserve appears set to go in the opposite direction from ECB and Bank of Japan policymakers by raising interest rates as early as next month. While moves in the USD hold the key for all risk assets, this will largely be driven by the implied probability of a December rate hike from the Federal Reserve, Chris Weston, chief market strategist at IG Ltd, said in a client note. The dollar gained against a string of emerging currencies, rising 0.49 percent against the won, 0.47 percent against Malaysias ringgit, 0.23 against Thailands baht, and 0.25 percent against the Taiwan dollar. It also advanced against the Singapore dollar.