Euro under Pressure as ECB Looms

By: Barbara Zigah

The Euro slipped and held near to a 2-week low versus the U.S. Dollar, falling overnight as still more dismal economic news puts pressure and the spotlight on the European Central Bank which will announce the outcome of its monthly policy meeting later today. As reported at 12:09 p.m. (JST) in Tokyo the EUR/USD was trading at $1.3145, a decline of 0.1% but off the low of $1.3122 struck during the overnight hours. Besides the ECB meeting today, markets will focus on a Spanish auction and are hopeful that of solid demand despite the recent downgrade. One strategist believes that the ECB won’t readily commit to additional easing but will likely hint at that option and vigilantly watch for further deterioration.

The New Zealand Dollar also saw a sharp decline following a report that showed an unexpected rise in the country’s unemployment rate; against the U.S. Dollar. The Kiwi Dollar slid at one point to $0.8040, a low not seen in several months, before recovering to $0.8054, still a loss of 0.4%. Some analysts are already beginning to price in a cut to the benchmark rate from the Reserve Bank of New Zealand, though the market’s say that that probability is less than 40% at the present time, though any more negative news will certainly increase the likelihood of one in the coming months.