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Euro falls in Asia ahead of expected rate cut

Euro falls in Asia ahead of expected rate cut

The euro slipped against the U.S. dollar and yen in Asian trade yesterday as worries grew over Europe's economic health ahead of an anticipated rate cut by the region's central bank.
Dealers also saw little to cheer about in the United States and Japan, where new data confirmed the gloomy state of their economies.
The euro fell to US$1.3174 in Tokyo afternoon trade from 1.3184 late Wednesday in New York and to 117.05 yen from 117.36. The U.S. dollar edged down to 88.85 yen from 89.00 yen.
Investors were digesting news that credit ratings agency Standard & Poor's slashed its rating on Greece and warned of possible downgrades to Ireland, Portugal and Spain, said Hachijuni Bank forex strategist Masatsugu Miyata.
"The euro risks floundering further as it is very difficult to foretell economic prospects in Europe," he said.
The ratings news strengthened speculation that the European Central Bank may be forced to lower its key lending rate by as much as 75 basis points when it meets later in the day, he said. Markets expect the central bank to reduce interest rates by at least 50 basis points from the current 2.50 percent.
But Yuji Saito, head of FX Group at Societe Generale, said a 50-point cut would disappoint the market.
"They will consider the ECB's move slow compared with the Bank of England," Saito told Dow Jones Newswires. The British central bank last week slashed its rates to 1.50 percent.
The ECB has already lowered borrowing costs by 175 basis points since October, but rates remain much higher than in the United States and Japan, where they are close to zero.
Investors were also waiting for the ECB's post-meeting comments for clues on future monetary policy, as the eurozone struggles to curb the downturn while its hands are tied by budget regulations, said Miyata.


Updated : 2021-07-30 12:48 GMT+08:00