Euro holds up against dollar in Asia

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TOKYO: The euro held up against the dollar in Asia on Tuesday despite poor economic data for the 18-nation eurozone pointing to slowing growth.
The common currency bought $1.3597 in Tokyo midday trade against $1.3601 in New York on Monday afternoon, although it slid to 138.50 yen from 138.65 yen.
The dollar edged down to 101.86 yen from 101.94 yen.

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The euro was almost flat after disappointing data on the bloc’s business activity.

“The risk-on attitude remains fashionable on capital markets, driven mostly by perceptions of the main central banks’ behavior,” Credit Agricole said in a note that came amid a period of calm.

“Market participants remain convinced that ‘as long as the music is playing, you’ve got to get up and dance.’”

Main central banks have been committed to low interest rates to stimulate economies.

The European Central Bank lowered all three of its key rates this month, with chief Mario Draghi saying policymakers would also be open to possible asset purchases similar to those undertaken in the United States and Japan.

Eurozone business activity slipped for the second month running in June, suggesting a modest recovery could be stalling, a closely watched survey showed on Monday.

Markit Economics said its Eurozone Composite Purchasing Managers Index, a leading indicator of overall economic activity, slipped to 52.8 points from 53.5 in May, its weakest level since December.

The data showed that growth remained robust in Germany, despite weakening slightly, but that the downturn deepened in France, the country increasingly generating the most worry in the currency bloc.

Daisuke Karakama, chief market economist at Mizuho Bank, said the euro was not plunging but would likely remain top-heavy against the dollar and yen this week.

“The ECB will likely make all-out efforts to stabilize the euro at a low level, using the market’s expectation for additional easing,” Karakama said in a weekly note.

AFP

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