WSJ:WORLD FOREX: Euro Stays Under Pressure From Renewed Debt Concerns
-- The euro remains weak following an overnight slide in response to fresh sovereign debt concerns
-- Traders refrain from betting on a further euro slide ahead of France's bond auction
-- Traders look ahead to next week's visit to Japan by the U.S. treasury secretary
By Tatsuo Ito
Of DOW JONES NEWSWIRES
TOKYO -(Dow Jones)- The euro stayed under pressure in Asia Thursday after tumbling overnight in the wake of fresh concerns about Europe's debt crisis, while traders eyed a French government bond sale later in the day.
"The euro's overnight fall impressed on me that the market will be at the mercy of the debt problems again this year," said Dai Sato, senior vice president of the currency division at Mizuho Corporate Bank.
At 0450 GMT, the euro was at $1.2926 from $1.2946 late in New York Wednesday, according to EBS via CQG. It was at Y99.17 from Y99.38.
"It's not a simple risk-on or risk-off story. The euro looks peerlessly weak, as other riskier currencies weren't sold much last night," Sato said.
But he was unsure if the euro would keep falling, given significant potential buy-back demand for the common currency with the market heavily invested in euro shorts. "If Friday's U.S. jobs data come in stronger than expected, there would be a room for all risk currencies including the euro to bounce back," Sato added.
The euro was battered overnight by a raft of negative news, from a bigger-than-expected discount on new shares offered by Italy's largest bank, UniCredit, to Spain's debt woes and concerns over negotiations on a Greek bailout by March to stave off a disorderly default. The market now awaits a EUR8 billion bond auction by France later in the day.
"This auction could serve as a barometer to see if France will be regarded as one of the countries close to Germany or one close to Italy and Spain" in terms of creditworthiness, Sato added. France is seen as a leading candidate among European nations to lose its triple-A credit rating.
The euro may extend its losses if the French bond auction goes poorly, said Sumino Kamei, senior analyst at Bank of Tokyo-Mitsubishi UFJ. The single currency may fall to $1.2860 later in the global day as temporary risk-on trading since the start of the year loses steam, he added.
The dollar was at Y76.73 from Y76.72. Traders are looking ahead to next week's trip to Japan by U.S. Treasury Secretary Tim Geithner after a Treasury report last week criticized Japan's unilateral currency intervention. Geithner will be in Tokyo on Jan. 12 for meetings with Prime Minister Yoshihiko Noda and Finance Minister Jun Azumi.
The U.K. pound was at $1.5604 from $1.5654, while the dollar was at CHF0.9422 from CHF0.9408.
The ICE Dollar Index, which tracks the U.S. dollar against a basket of currencies, was at 80.172 from 80.080.
Interbank Foreign Exchange Rates At 23:50 EST / 0450 GMT
