Dollar weaker in Asian trade

TOKYO - The dollar languished close to record lows against the euro in Asian trade on Thursday as market jitters grew ahead of a eurozone interest rate decision and key US jobs data, dealers said.

By (AFP)

Published: Thu 6 Mar 2008, 1:02 PM

Last updated: Sun 5 Apr 2015, 1:16 PM

The dollar slipped to 103.90 yen in Tokyo afternoon trade from 104.05 in New York late Wednesday.

The euro rose to 1.5279 dollars from 1.5268, close to its record high of around 1.53 reached on Wednesday. The euro slipped to 158.74 yen from 158.86.

The greenback was pressured by a private-sector survey showing that US firms shed 23,000 jobs in February, defying expectations for positive growth of about 18,000 new positions, dealers said.

Analysts said the ADP National Employment Report suggested that official non-farm payrolls due to be released Friday could also reveal job losses, although the report has not always been a reliable guide in the past.

Daisuke Uno, chief strategist at Sumitomo Mitsui Banking Corp. (SMBC), said that he was still expecting positive jobs growth.

“I feel that the payrolls will show a slight increase. It will be reasonable for the market to return to buying back the dollar,” he said.

A contracting job market, indicative of sharply slower US economic momentum, raises chances the US Federal Reserve will cut interest rates further from the current level of 3.0 percent, making the dollar less attractive to investors.

The Fed may lower rates by 50 basis points on March 18, said Tim Condon, research head at ING Financial Markets.

“If the data on Friday is signalling that the labour market is worse than what most people expect, then we could see the dollar” dropping to new record lows against the euro, he said.

The dollar was affected by disappointment over the size of a rescue package for America’s largest bond insurer, Ambac, which said it would raise capital of 1.5 billion dollars, less than investors had been hoping for.

“Investors wanted to see more of a bailout-type arrangement, such as capital injections from other, bigger financial institutions,” said Mizuho Trust & Banking dealer Kazuyuki Kato.

Market participants were cautious ahead of an interest rate decision by the European Central Bank later on Thursday when rates are expected to be left unchanged at 4.0 percent amid inflation worries.

But there is speculation that the ECB may have to take action later in the year to bolster the eurozone economies, dealers said.

“At some point in the autumn, the ECB will decide to cut rates because the US economic slump will have spread to the European economy,” said Uno.

The Bank of Japan is also expected to leave its key interest rate unchanged at 0.5 percent at the end of a two-day meeting on Friday.

The dollar was mixed in regional Asian trade.

It slipped to 1.3877 Singapore dollars from 1.3895 on Wednesday afternoon, to 30.78 Taiwan dollars from 30.84 and to 40.62 Philippine pesos from 40.65.

The greenback was stable at 9,079 Indonesian rupiah and at 31.58 Thai baht while edging up to 949.15 South Korean won from 947.30.

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