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A weak tone in the Chinese share market added to the euro's woes in Asian trading Tuesday.
Written by article default Tuesday, 18 May 2010 06:22
Market OverviewA weak tone in the Chinese share market added to the euro's woes in Asian trading Tuesday by decreasing investors' appetite for risk, dragging the European currency lower against the yen and dollar in Asia.
Market jitters over the U.S. Senate's approval Monday of a measure that could make it more complicated for the U.S. to commit taxpayer money to the International Monetary Fund also weighed on the euro, though it appeared unlikely that the step would affect the recent European sovereign debt crisis.
The euro had dropped to USD1.2341 as of 0450 GMT from USD1.2392 in New York late Monday, and fell to JPY114.13 against the yen compared with JPY114.64. Traders said that U.S. banks and Japanese institutional players appeared to be behind the selling.
The U.S. currency was at YEN92.48 as of 0450 GMT compared with JPY92.49 late Monday.
The ICE Dollar Index, which tracks the greenback against a trade-weighted basket of currencies, was at 86.441 at 0450 GMT from 86.149 late Monday.
The Pound USD1.4417 bounced back from yesterday's low of USD1.4249, but failed to see a strong break above USD1.45 which still retains the downside pressure.
The Australian dollar was weaker in Asia on Tuesday, weighed by views the central bank may cool its pace of rate hikes and on continued jitters linked to Europe's fragile economic outlook.
Market expectation
Market uncertainty about the outlook for the Greek bailout and its effect on the euro continued to make traders pessimistic toward the single currency.
Some traders said if euro-zone debt jitters worsen in weeks ahead, the single currency could fall toward USD1.2000 and YEN112.50.
Later in the global session the market will be watching the German ZEW Indicator of Economic Sentiment, which could pull down the euro further from Asian levels if it comes in worse than expected, to around USD1.2300 and JPY113.30, traders said. The data, due at 0900 GMT, is expected to show current conditions at minus 33 in May compared with minus 39.2 in April.
European stocks are expected to open modestly higher Tuesday, following the late rally on Wall Street, while the euro and sterling are trading above Monday's lows.