RTRS:Euro slips but support seen intact as ECB awaited
(Reuters) - The euro dipped slightly against the dollar in Asian trading on Wednesday, but support for the single currency stayed intact a day ahead of a European Central Bank meeting that is expected to unveil more details of a long-awaited debt-buying plan.
The European unit was down 0.3 percent at $1.2526, off its Tuesday session high of $1.2629 but still not far from Friday's high of $1.26378 on trading platform EBS, which was its strongest level since early July.
In early Asian trading, the euro bumped through stop-loss orders which were said to have been placed at Tuesday's low of $1.2555, as well as at $1.2550, which was a 50 percent retracement of its recent rise from $1.2465 on August 28 to Friday's high. Further stops were said to lie below $1.2475.
The drop was limited as investors awaited the ECB's plan, which is likely to focus on buying shorter maturities to bring down soaring bond yields of southern euro zone countries.
"The euro is finding the going a little bit easier. The prospect of the collapse of the euro is becoming a distant memory with many former bears," said Andrew Wilkinson, chief economic strategist at Miller Tabak & Co.
ECB President Mario Draghi told European lawmakers on Monday that purchases of short-term sovereign bonds to help debt-burdened countries like Spain and Italy would not breach European Union rules, according to a recording obtained by Reuters.
The euro "is range bound but seems to be quite well supported. The high expectations for the ECB meeting on Thursday remain after Draghi's closed-door meeting on Monday," Wilkinson said.
Still, fears that the ECB could disappoint and trigger a further euro correction prompted some investors to take profits on its recent gains.
"Some investors are wary that the euro's rally ahead of the ECB meeting will turn out to be, 'buy the rumor, sell the fact," with so many key details of the debt-buying plan still unclear, such as volume," said Kimihiko Tomita, head of foreign exchange for State Street Global Markets in Tokyo.
Some have said that unless the ECB sets no limits on its bond purchases, investors could pile in to dump paper on the bank, threatening the success of the plan.
The euro also lost ground against the yen, down 0.4 percent to 98.14 yen.
MORE WEAK U.S. DATA
Apart from the ECB meeting on Thursday, key U.S. data this week will come on Friday, when the monthly employment report is expected to show employers increased payrolls by 125,000 workers last month, down from July's 163,000.
The dollar was steady against its Japanese counterpart at 78.38 yen.
The Australian dollar slipped 0.3 percent to $1.0190 after dropping to a six-week low of $1.0182 on growing speculation the Reserve Bank of Australia will cut interest rates to cushion the economy from falling commodity prices.
Government data on Wednesday showed Australia's gross domestic product rose 0.6 percent in the second quarter, at a slower pace from the previous quarter when it jumped 1.4 percent.
Australia's central bank held rates steady on Tuesday as widely expected, though a slowdown in China has left the country's commodity-fuelled economy vulnerable.
(Additional reporting by Masayuki Kitano and Reuters FX analyst Krishna Kumar in Singapore; Editing by Kim Coghill)
