Euro inches higher in Asian trade
TOKYO – The euro inched higher in Asian trade Wednesday as traders watched for any signs of monetary easing from the US Federal Reserve after its policy meeting wraps up later in the day.
The euro was buying $1.3194 and 107.47 yen in Tokyo morning trade, against $1.3192 and 107.35 yen in New York late Tuesday.
The greenback changed hands at 81.44 yen, against 81.36 yen.
Few are expecting major moves from the Fed amid signs of tepid growth in the world’s biggest economy, with the bank likely to keep its ultra-low interest rate policy unchanged.
But a post-meeting press briefing by Fed chief Ben Bernanke may offer hints about the economy’s direction, they said.
The rate decision “will be critical to determine the US dollar’s direction over coming sessions”, Mitul Kotecha, strategist at Credit Agricole, said in a note to clients.
“Assuming that the Fed does not alter its policy setting but instead only tinkers with its economic forecasts, the… dollar will escape any further selling pressure.”
The yen’s slip came as traders looked to a Bank of Japan meeting later in the week to see if policymakers make any further easing moves in a bid to kickstart the country’s moribund economy.
The euro’s uptick on Wednesday came after the single currency took a hit earlier in the week on news that eurozone private sector activity in April sank at the fastest rate in five months, suggesting the 17-nation bloc faces a longer recession than previously thought.
The results of the first round of the French presidential election, with Socialist challenger Francois Hollande ahead of Nicolas Sarkozy, also weighed on the currency.
Hollande has said he would move to renegotiate a fiscal pact agreed by European leaders late last year, shifting the focus toward growth rather than austerity measures as a buffer against the eurozone debt crisis.
But the move may stoke friction with other nations, including Germany, amid ongoing efforts to get the eurozone’s fiscal house in order, dealers said.
The French vote showed a deeply divided electorate – almost 20.0 percent voted for far-right candidate Marine Le Pen – with no clear sign of who will win a runoff in May.
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