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The euro fell against the dollar in Asia Tuesday.
Written by article default Tuesday, 01 June 2010 10:24
Market OverviewThe euro fell against the dollar in Asia Tuesday as reports of a delay in Argentina debt restructuring and of the European Central Bank's estimate of bank losses may propel investors to further cut holdings of euro-denominated assets. The ECB released its semiannual Financial Stability Review and said that euro-zone banks may face net write-downs on loans and securities of EUR90 billion in 2010 and EUR105 billion in net losses in 2011. Asian investors took these overnight reports as cues to sell the euro, as market participants from the U.S. and U.K. absent from trading yesterday had yet to react. As of 0450 GMT, the euro was at USD1.2269 from USD1.2301 overnight. It also weakened against the yen to YEN111.72 from YEN112.40. The greenback, meanwhile, was almost unchanged at YEN91.10 from YEN91.09. The ICE Dollar Index, which tracks the greenback against a trade-weighted basket of currencies, was at 86.690 from 86.508 Monday. The Pound outperformed most currencies as the Holiday market ignored the political scandal over the weekend and sent Cable back above USD1.4500 after opening under pressure. EURGBP was the big winner falling back below 0.8500. The Australian dollar was sharply weaker late Tuesday, largely on a continuing theme of risk aversion running through currency markets, but the unit won some support after the central bank hinted more rates hikes are possible.
Market expectation
Traders said comments by European Central Bank board member Christian Noyer weighed on the euro and other currencies such as the Australian dollar. The reports could further weaken the euro in coming days, dealers said. That is because they suggest that European sovereign debt problems may be worsening and could spread to other regions, said analysts. But in the longer-term, the dollar's downside against the yen is limited due to uncertainties over Japanese politics, said analysts. European stocks are expected to start slightly lower Tuesday, following a dip in Asian equity markets as Chinese manufacturing growth data disappointed investors. Dealers said US dollar will likely fall later in the day as Asian hedge funds are interested in executing automated stop-loss selling orders around JPY90.80, taking their cue from weak Japanese shares.