WSJ:WORLD FOREX: Euro Eases Vs Dollar In Asia Before German-France Meeting
--The euro eases slightly against the dollar, while the dollar is unchanged versus the yen.
--Traders see the euro falling further later in the day after French and German leaders' meeting.
--The dollar stays above key Y76.50 mark, but traders remain on intervention watch.
By Tatsuo Ito
Of DOW JONES NEWSWIRES
TOKYO (Dow Jones)--The euro eased slightly against the dollar in Asia Tuesday and traders expect the single currency to fall further later in the global day as a meeting between French and German leaders is unlikely to produce any surprises and concerns about the European debt concerns could persist.
French President Nicolas Sarkozy and German Chancellor Angela Merkel will meet on Tuesday to discuss "euro-zone issues." Speculation that they may talk about euro-zone bonds boosted the euro overnight.
"There's strong expectations for the meeting, but I think the euro will be sold" after the meeting fails to come up with something surprising, said Yuji Saito, foreign-exchange market director at Credit Agricole in Tokyo.
"From a technical standpoint as well, the euro needs a lot of energy to break $1.4500," Saito added.
At 0500 GMT, the euro was at $1.4428 from $1.4445 late Monday in New York, according to EBS via CQG. The dollar was unchanged at Y76.85, while the euro was at Y110.85 from Y111.00. The U.K. pound was at $1.6366 from $1.6391. The dollar was at CHF0.7816 from CHF0.7844.
A senior member of Chancellor Angela Merkel's Christian Democrats said Monday introduction of euro-zone wide bonds wouldn't receive majority approval from German government lawmakers.
"The meeting won't be able to sweep away concerns over peripheral countries in Europe," Osao Iizuka, head of FX trading at Sumitomo Trust and Banking Co. said. Iizuka added the euro's rough ride should continue for a while, with the single currency likely to move in a $1.4250 to $1.4600 range.
Despite the calmness in the market due to the summer holiday season in Japan, participants remain on alert over a possible currency intervention whenever the dollar is about to fall to its post-war record low of Y76.25.
"The dollar remains at a crucial level," Iizuka said. "The Y76.50 level is becoming psychologically important" since talk of the BOJ's rate-check last Thursday temporarily lifted the dollar.
However, even if the finance ministry wades back into the market, it would be difficult to reverse the trend, Iizuka said, adding that exporters appear to be intent on selling dollars at Y79.50 and above.
The ICE Dollar Index, which tracks the U.S. dollar against a basket of currencies, was at 73.927 from 74.607.
Interbank Foreign Exchange Rates At 00:50 EDT / 0450 GMT
