Euro falls in Asia

The euro fell on Thursday, with further pullbacks seen likely, as worries about how Europe will address its fiscal problems offset expectations of an upcoming rate hike by the European Central Bank. The single European currency extended its losses after Moody's downgraded Spain's rating to Aa2 from Aa1 with a negative outlook. Technical strategists said the euro's consolidation from Monday's four-month peak at $1.4036 is still in progress and a deeper retreat cannot be ruled out.
Investors are looking ahead to a European policy makers' meeting on Friday and stress tests on banks planned in the coming weeks. The euro fell 0.7 percent to $1.3818, having dropped to as low as $1.3804 earlier. Market players expect the focus to fall on debt woes in the coming weeks, when European leaders and finance ministers will hold a series of meetings to deal with debt problems, starting with the euro zone summit on Friday.
Few investors, however, expect a breakthrough at these meetings. FX Concepts, which employs systematic investment strategies, said the cycles suggest that the euro has formed a medium-term peak, although it could see some final strength into Friday. The models also suggest that the euro could peak again in June when equities are likely to hit a top. The Australian dollar fell after data showed China swung to a surprise trade deficit in February of $7.3 billion, its largest in seven years.
The numbers stirred worries that China's growth could slow and affect countries such as Australia, which has benefited from China's expansion. Earlier, the Australian dollar briefly tumbled after data showed Australian employment fell 10,100 in February, well below market expectations for a rise of 20,000. The data did show, however, that full-time employment rose 47,600, helping limit the impact on the Aussie. .
The Australian dollar fell 0.7 percent to $1.0036, dipping below support near $1.0055, which is right around the 61.8 percent retracement of its rally from late February to early March, and also near an intraday low hit on March 8. Traders said there was talk of bids for the Australian dollar near parity and large stop-loss bids around $0.9950. Sterling fell 0.3 percent to $1.6158 ahead of a central bank policy decision later on Thursday.
The Bank of England is expected to keep rates on hold on Thursday. Market players are bracing for the possibility of a quarter percentage point rate hike in May. The New Zealand dollar dipped 0.2 percent to $0.7354, having hit a five-month low of $0.7332 after the Reserve Bank of New Zealand cut interest rates by an aggressive 50 basis points to 2.5 percent. The rate cut was expected to ease the impact of an earthquake that hit the country last month. The dollar inched up 0.2 percent to 82.90 yen.