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euro-400TOKYO: The euro's rally to multi-year highs came to a halt in Asian trade on Monday ahead of a European Central Bank policy meeting and after France's finance minister said the unit may be overheating.

 

The single currency weakened to $1.3626 and 126.26 yen from $1.3637 and 126.60 yen in New York trading on Friday.

 

The dollar was down at 92.65 yen against 92.80 yen in US trade, hardly moving after Japan's finance minister said that ending the yen's long-running uptrend remained a top priority for the new conservative government.

 

"The most important task for this Cabinet is to overcome the yen's protracted strength and deflation, expand employment and income, and bring back a strong Japanese economy," Taro Aso said in parliament.

 

Tokyo has fallen under criticism from overseas that it was orchestrating a devaluation of the yen -- which has been on a steep slide in recent months -- that risked setting off a global currency war. Japan officials have repeatedly denied those claims.

 

 

On Sunday, French Finance Minister Pierre Moscovici said the 17-nation euro was possibly too strong, the second high-profile European official to publicly raise concerns about the unit's recent rise.

 

"The euro is stable, the euro is strong, perhaps too strong in some regards," Moscovici told France 2 television.

 

Earlier this month, Jean-Claude Juncker, outgoing head of the eurozone finance ministers' group, warned that the euro's value was "dangerously high" as it threatens the competitiveness of European exports.

 

The resurgent currency on Friday soared above $1.36 and hit its highest level against the dollar since mid-November 2011, lifted by renewed optimism about the eurozone and a key US jobs report.

 

The US unemployment rate rose to 7.9 percent in January from 7.8 percent in December but the average monthly number of people finding work in 2012 was revised upwards, according to official data.

 

The news reinforced expectations that the Federal Reserve will maintain its ultra-loose monetary policy for the foreseeable future, sending the Dow to close Friday above 14,000 for the first time since October 2007.

 

The 0.1 percentage point rise in the unemployment rate "kept continuing hopes of Fed QE (quantitative easing) well and truly alive", National Australia Bank (NAB) said.

 

Markets were also keeping an eye on a European Central Bank (ECB) policy meeting later in the week.

 

Analysts widely expect the ECB to keep interest rates on hold as it takes stock of the newfound calm on financial markets, with similar expectations for the Bank of England (BoE), which is awaiting the arrival of a new head.

 

"The ECB and BoE meetings should come and go without anything new, the BoE likely to stay their hand on any QE now probably until after Governor-designate Mark Carney arrives mid year," NAB said.

 

The dollar-yen rate may swing higher on speculation over the Japanese government's nominee to head the Bank of Japan, with current Governor Masaaki Shirakawa due to end his term in April, dealers said.

 

The dollar was mostly lower against other Asia-Pacific currencies, falling to Sg$1.2387 from Sg$1.2422 on Friday, to Tw$29.59 from Tw$29.64 and to 1,087.06 South Korean won from 1,095.65 won.

 

The greenback also slipped to 40.60 Philippine pesos from 40.70 pesos, to 53.01 Indian rupees from 53.33 rupees, and to 9,682 Indonesian rupiah from 9,695 rupiah.

 

The Australian dollar rose to $1.0422 from $1.0398, while China's yuan fetched 14.85 yen against 14.81.

 

Copyright AFP (Agence France-Presse), 2013

 


 



 
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