SYDNEY (Jan 3): The euro got off to a rocky start against major currencies on Tuesday, standing just above a decade trough on the yen in Asia and looked set to remain under pressure in 2012 from Europe's debt crisis.
The U.S. economy will be front and center this week - starting with ISM Manufacturing on Tuesday where an improvement to 53.2 is expected from November's reading of 52.7.
It will be followed by the release of the FOMC Minutes where investors will look for signs of another round of quantitative easing. But the main event for the week will be non-farm payroll data on Friday where analysts are hoping for a robust rise of 150,000.
The euro was at 99.42 yen, having slipped as deep as 98.71 overnight on the EBS trading platform, its lowest since late 2000, following breaks of major chart support from 100 yen.
The single currency also reached record lows on the Australian dollar. It was last at A$1.2633, having shed more than two cents in the past week, having broken through key levels between A$1.2900-A$1.3000. Technical charts point to further downside with a test of A$1.2500 in sight, according to a trader.
Against the U.S. dollar, the euro was steady at $1.2935 , but within striking distance of its 2011 trough of $1.2856 hit last week.
"{The euro) ended last year on a downtrend, breaking key levels. Through much of last year, people were surprised how well it held up," said Greg Gibbs, a strategist at RBS.
"Eventually it started to fall... and that will make the market more skeptical over it and hence it's probably going to look a bit soggy at the start of the year."
Worries about high sovereign debt levels and a lack of policy solutions to the region's 2-year-old debt crisis were expected to push the euro lower in the coming weeks and months.
A solution seems to remain distant with France's Nicolas Sarkozy due to meet German Chancellor Angela Merkel in Berlin on Jan. 9. Talks are likely to centre on new rules to enforce budget discipline across the European Union.
January starts a very busy quarter for eurozone issuance with Germany and France kicking off bond sales on Wednesday and Thursday, while Italy and Spain will begin their 2012 funding next week.
Investors are particularly concerned about Italy's cost of funding in the face of around 100 billion euros of redemption and coupon payments in the first four months of the year.
Sentiment, though, was helped by a rise in China's official PMI to 50.3 in December, from 49 in November. The stronger-than-expected reading combined with rising prospects of more monetary easing helped offset worries about a sharp slowdown.
China's central bank is in the spotlight with widespread speculation in financial markets that it will soon unveil a cut in the required ratio of reserves (RRR). The move would free up funds that could be used for lending to support growth, though China's leaders remain wary of relaxing their grip too soon on inflation.
The dollar index inched up 0.1 percent to 80.288, off a one-year peak of 80.854 struck on Thursday, while the USD was hovering around six-week lows against the yen at 76.96 in thin trading.
With the pair standing below the Ichimoku cloud, a move to the record low of 75.31 is possible, according to a trader. - Reuters
The U.S. economy will be front and center this week - starting with ISM Manufacturing on Tuesday where an improvement to 53.2 is expected from November's reading of 52.7.
It will be followed by the release of the FOMC Minutes where investors will look for signs of another round of quantitative easing. But the main event for the week will be non-farm payroll data on Friday where analysts are hoping for a robust rise of 150,000.
The euro was at 99.42 yen, having slipped as deep as 98.71 overnight on the EBS trading platform, its lowest since late 2000, following breaks of major chart support from 100 yen.
The single currency also reached record lows on the Australian dollar. It was last at A$1.2633, having shed more than two cents in the past week, having broken through key levels between A$1.2900-A$1.3000. Technical charts point to further downside with a test of A$1.2500 in sight, according to a trader.
Against the U.S. dollar, the euro was steady at $1.2935 , but within striking distance of its 2011 trough of $1.2856 hit last week.
"{The euro) ended last year on a downtrend, breaking key levels. Through much of last year, people were surprised how well it held up," said Greg Gibbs, a strategist at RBS.
"Eventually it started to fall... and that will make the market more skeptical over it and hence it's probably going to look a bit soggy at the start of the year."
Worries about high sovereign debt levels and a lack of policy solutions to the region's 2-year-old debt crisis were expected to push the euro lower in the coming weeks and months.
A solution seems to remain distant with France's Nicolas Sarkozy due to meet German Chancellor Angela Merkel in Berlin on Jan. 9. Talks are likely to centre on new rules to enforce budget discipline across the European Union.
January starts a very busy quarter for eurozone issuance with Germany and France kicking off bond sales on Wednesday and Thursday, while Italy and Spain will begin their 2012 funding next week.
Investors are particularly concerned about Italy's cost of funding in the face of around 100 billion euros of redemption and coupon payments in the first four months of the year.
Sentiment, though, was helped by a rise in China's official PMI to 50.3 in December, from 49 in November. The stronger-than-expected reading combined with rising prospects of more monetary easing helped offset worries about a sharp slowdown.
China's central bank is in the spotlight with widespread speculation in financial markets that it will soon unveil a cut in the required ratio of reserves (RRR). The move would free up funds that could be used for lending to support growth, though China's leaders remain wary of relaxing their grip too soon on inflation.
The dollar index inched up 0.1 percent to 80.288, off a one-year peak of 80.854 struck on Thursday, while the USD was hovering around six-week lows against the yen at 76.96 in thin trading.
With the pair standing below the Ichimoku cloud, a move to the record low of 75.31 is possible, according to a trader. - Reuters
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