Fin24

Euro weakens after recent rally

2012-10-18 07:51

Tokyo - The euro eased on Thursday in Asia after posting strong gains in New York ahead of a two-day European Union meeting amid hopes for progress on addressing Greece and Spain's debt woes.

The unit edged lower to $1.3091 in Tokyo midday trade from $1.3120 in New York on Wednesday, bringing an end to its week-long climb, while it also dipped to ¥103.62 from ¥103.69.

However, the single currency is still well up from the $1.2909 and ¥101.46 at the start of the week.

The dollar rose to ¥79.14 on Thursday from ¥78.97 in new York on speculation the Bank of Japan will introduce another round of monetary easing, while upbeat US economic data also provided support.

Japanese media have reported the country's central bank now sees inflation rising less than its 1% target for fiscal year to March 2014, which will likely put pressure on the BoJ to usher in further measures at next policy meeting.

"Risk appetite remains positive," National Australia Bank (NAB) said, citing factors including Barack Obama's improved polls after the second of three presidential debates and a September jump in US housing starts.

Adding to confidence was news China's economy grew 7.4% in the third quarter, easing for a seventh straight quarter, but a figure the government and analysts said indicated it was stabilising.

The EU summit, which starts Thursday, comes as reports circulate that Greece has largely reached agreement with its international creditors that will allow it to renegotiate its multi-billion-euro bailout.

"Sovereign risk could further recede if expectations rise that a comprehensive agreement could be reached following discussions at the summit," said Junichi Ishikawa, forex analyst at IG Market Securities in Tokyo.

There are also growing hopes that Spain will formally ask for a rescue to shore up its rocky finances.