TOKYO: The euro struggled at a one-year low against the dollar in Asia yesterday, ahead of a European Central Bank (ECB) meeting where policy-makers will consider their next move in the face of weak eurozone inflation.
The European single currency slipped to $1.3119, its lowest level since September last year and down from $1.3139 in New York, although it ticked up to 136.77 yen from 136.67 yen in US trade.
The dollar fetched 104.17 yen, its strongest since January and up from 104.06 yen in New York on Friday. Eurozone inflation eased to 0.3 percent in August, raising concerns the 18-nation bloc is about to tip into deflation.
The data has put pressure on the ECB to take fresh monetary easing steps at its policy meeting Thursday, a move that would tend to weaken the unit.
“Speculation for the ECB to consider more aggressive policy action this week has increased considerably after (bank chief Mario) Draghi indicated downside risks to long-term inflation expectations last week,” Credit Agricole said.
Despite weak US personal spending data on Friday, the dollar pushed ahead as second-quarter economic growth figures came in strong.
Investors were also keeping a close eye on geopolitical developments, with concerns increasing that Russia and Ukraine are on a collision course. “Geopolitical risk will likely continue to overshadow the market in the days ahead, especially given the one-week deadline set by the EU for Russia to scale back operations in Ukraine or face more sanctions,” Credit Agricole said.
AFP
