Euro ticks up, Aussie dips as central bank holds rates
The euro ticked up in Asia on Tuesday, steadying from a slide after the Eurogroup chairman said the common currency was overvalued, while the Australian dollar dipped after the central bank kept interest rates steady.
Most Asian stock markets fell after the S&P <.SPX> extended its slide to a fourth day overnight, hitting its lowest since mid-March, as a spate of weak U.S. economic data pointed to slowing growth. <.N>
The euro traded at $1.4609 at 0443 GMT (12:43 a.m. ET), having fallen as low as $1.4555.
The common currency came under pressure on Monday after Jean-Claude Juncker, chairman of the Eurogroup, made his comment about valuation and a spokesman for the German finance ministry said a second aid program for Greece was not certain.
Those comments (from Juncker) probably weighed on the euro at the margin. But the direction of a weaker dollar is pretty clear this point in time, so I'm expecting a bounce in the euro, said Richard Grace, chief currency strategist at Commonwealth Bank.
The euro has gained more than 4 percent since climbing from its May 23 trough versus the dollar. Despite uncertainty over a fresh rescue package for Greece, it is being supported by persistent U.S. dollar weakness and expectations that the European Central Bank will signal a July interest rate rise at its policy meeting on Thursday.
Investors will be closely following a speech by Federal Reserve Chairman Ben Bernanke at a conference around 1945 GMT (2:45 p.m. ET) on Tuesday for more clues on the central bank's view of the slowdown and its impact, if any, on the Fed's exit from its extremely easy monetary policy.
The Australian dollar, the world's fifth-most traded currency, fell below $1.0700 after the Reserve Bank of Australia held rates steady at 4.75 percent, from $1.0745 before the decision. Markets had been expecting it to repeat a warning that rates would likely have to rise in the next few months in order to put a lid on price pressures, but no such indication was given.
The Nikkei average <.N225> was marginally higher at 9,439.13 as short covering of utilities and some bargain-hunting offset selling on fears that U.S. growth may be stalling, analysts said.
When the Nikkei trades below 9,400 institutional investors buy global cyclical shares as a long-term investment and retail investors tend to buy defensive shares with high dividend yields, such as drugmakers, said Fujio Ando, a senior managing director at Chibagin Asset Management.
MSCI's index of Asia-Pacific stocks <.MIAPJ0000PUS> outside Japan fell 0.5 percent.
Technical indicators suggest further declines may be on the horizon, analysts at Barclays Capital said in a research note.
Various topping patterns in equity markets from different regions suggest the risk of an ongoing corrective pullback in equity markets over the summer, they said.
Brent crude oil for July delivery fell 60 cents to $113.88 a barrel, extending Monday's fall when it closed at its lowest in two weeks, on expectations OPEC will raise production targets when it meets this week.
U.S. gasoline prices fell for the fourth week in a row last week as crude prices recoiled, relieving some pressure on consumers and reinforcing the views of some economists that the current economic soft patch will be temporary.
U.S. retail sales data due out later in the day may signal whether lower fuel prices enticed shoppers back into the stores.
Gold was almost around $1.50 higher at $1,544.66 per ounce by 0453 GMT (12:53 a.m. ET), after closing at $1,543.05 on Monday. Gold, one of the chief beneficiaries of worries about the security of currencies and other assets, set a record high of $1,575.79 per ounce in early May.
(Reporting by Ian Chua in Sydney and Ayai Tomisawa in Tokyo; Editing by Kim Coghill)
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