By Nick Godt, MarketWatch
MUMBAI (MarketWatch) — The euro fell slightly against the dollar on Friday, as investors awaited news on whether Asian countries will contribute to Europe’s rescue plan, a day after a deal announced by European leaders sent the single currency sharply higher.
The euro EURUSD -0.28% recently traded at $1.4179, down from $1.4208 in late New York trade on Thursday.
On Thursday, the euro jumped the most in two and a half years after European leaders agreed to cut Greek debt, recapitalize the region’s banks and boost the capacity of the euro zone’s rescue fund fivefold to about $1.4 trillion.
China had welcomed the deal and Klaus Regling, chief executive of the European Financial Stability Facility (EFSF) was in Beijing Friday to seek Chinese participation in the fund.
“A strong support from China could boost the risk-taking sentiment [in markets] further,” currency analysts at BNP Paribas said in a note.
Speaking at a news conference, Regling said there woud be “no conclusion, certainly, today during our visit,” according to Dow Jones Newswires.
Meanwhile, the dollar index DXY +0.11% , which tracks the greenback against six major currencies, fell to 75.883 from 76.207.
Yen at record lows
Against the Japanese yen, the dollar USDJPY -0.26% continued to slump to record-low levels, trading at 75.86 from 75.92 late Thursday.
The jump has raised investors’ expectations that the Bank of Japan might intervene to stem the yen’s appreciation, which is hurting the competitiveness of Japan’s exports.
“Will they or won’t they intervene unilaterally in dollar/yen? The odds are not good in a risk on environment,” said Sebastien Galy, currency strategist at Societe Generale, in a note.
Japan is also being courted by the European Union to help in the rescue plan, which would give it another opportunity to weaken its currency against the euro, at least, Galy said.
Against the yen, the euro EURJPY -0.54% recently fell 0.1% to 107.52.
Nick Godt is a MarketWatch reporter based in Mumbai.
