ECB speculation weighs on euro

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IOL pic jun6 euro notes Reuters File picture: Lee Jae-Won

Tokyo -

The euro was hovering near an eight-month low against the dollar in Asia on Wednesday on speculation that the European Central Bank (ECB) would hint at further stimulus after a policy meeting.

The euro bought $1.3364 and 137.12 yen in Tokyo midday trade against $1.3369 and 137.20 yen in New York late on Tuesday.

The dollar was changing hands at 102.59 yen in Tokyo trade compared with 102.62 yen in New York trade on Tuesday.

The common European currency hit $1.3358 in US trade earlier on Tuesday, its lowest level against the dollar since November 11, 2013, before recovering somewhat.

While the ECB is not expected to change interest rate policy at a meeting on Thursday, traders say the central bank could suggest it will enact further stimulus in light of weak economic growth in the region.

National Australia Bank noted European retail sales and other data released on Tuesday were weak.

“Coupled with a rise in Russian troops lining the Ukraine border and raising speculation of an imminent flare-up in tensions, this has allowed the euro to underperform,” it said in a note.

On the other hand, the dollar picked up support from better-than-expected US economic data that analysts say could accelerate the Federal Reserve's plans to lift benchmark interest rate.

“US rate rises are coming; that's the message from equities and the US dollar overnight,” the Australian bank said after New York sessions on Tuesday that saw lower stock prices and a higher dollar. - Sapa-AFP

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