Both the U.S. Dollar and the Euro slipped in Asian trade as dismal economic data raised investors’ expectations of a more accommodative stance from both the Federal Reserve and the European Central Bank. In the Eurozone, Eurostat reported that the unemployment rate rose to 11.1% from 11.0%, in line with expectations but still a new record. It was also reported that factory activity remains well below the 50.0 threshold though across the board the results were slightly better than analysts’ expectations.
As reported at 10:47 a.m. (JST) in Tokyo, the EUR/USD pair was lower at 1.2586, slipping from recent highs and just nearing resistance which is pegged at 1.2700. The Euro was also lower against the safe haven Japanese Yen, trading at 100.26 Yen, well off the recent high coming in the wake of post E.U. Summit euphoria when the pair struck 101.00 Yen. The greenback was also lower against the Yen, trading at 79.65 Yen and off the high of 79.98 Yen struck on Monday.
Investors expect that the European Central bank will lower its benchmark rate to 0.75%, a 25 basis points drop, when it meets on Thursday. Expectations are also high that the Fed will announce QE3 when it meets at the end of the month.