|
 The euro fell 0.4 percent to $1.1205, and was down 0.7 percent
against the British pound, although it remained on track for a
quarterly gain against the dollar.
"A weak number was expected and bolsters expectations that the ECB
may have to expand its asset purchase program from the
60-billion-euros-a-month to something larger, perhaps by year-end,"
said Richard Falkenhall, currency strategist at SEB.
"That is negative for the euro, but a lot depends on how stock
markets behave. If stocks drop, then the euro is likely to be
supported as they are going in opposite ways."
Euro zone prices fell by 0.1 percent on an annual basis in September
after rising 0.1 percent last month, missing expectations for a zero
reading and remaining well below the ECB's target of just under 2
percent.
While the ECB is focused on inflation expectations and inclined to
look through falls in the headline rate, traders say a sustained
drop below zero could reinforce policymakers' fears about the firmer
euro's impact on financial conditions.
The common currency has eked out gains against the dollar this
quarter, mainly because investors have unwound euro-funded carry
trades in riskier assets and emerging currencies. That has seen the
euro move inversely to global stocks, which are on track for their
worst quarter in four years.
Demand for the safe-haven yen waned as global stocks steadied and a
semblance of calm returned to markets after recent turmoil, though
traders said month-end and quarter-end flows meant volatility is
likely to persist.
The dollar fetched 120.30 yen, up 0.5 percent on the day, having
turned around from a low of 119.24. The yen showed limited reaction
to data showing Japan's industrial output fell unexpectedly in
August.
[to top of second column] |
The yen has been a winner this quarter with investors unsettled by
worries about slower Chinese economic growth, the health of the
global economy and uncertainty over the timing of a hike in U.S.
interest rates. A meltdown in Glencore shares on Monday highlighted
jittery nerves, although the Swiss-based trader and miner did
rebound.
Traders said U.S. nonfarm payroll numbers due on Friday could
strengthen or weaken the case for a 2015 lift-off and set the tone
for the dollar. The market will also be keeping an eye on Fed Chair
Janet Yellen, who is due to speak at a conference at 1900 GMT on
Wednesday.
"If she wants to clarify anything, post this bout of risk-aversion,
then she may tweak the message from last (Thursday)," said Emma
Lawson, senior currency strategist at National Australia Bank.
On Thursday, a week after the Fed delayed a long-anticipated rate
hike because of recent turmoil in financial markets, Yellen said she
still expects the Fed to begin raising rates this year.
(Additional reporting by Hideyuki Sano; Editing by Catherine Evans)
[© 2015 Thomson Reuters. All rights
reserved.] Copyright 2015 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.
 |
