SINGAPORE, June 23 (Reuters) - Optimism about the U.S. economy pushed the euro to a new one-month low against the dollar and yen in Asia on Monday, while the region's stock markets were mixed.
The driving force behind the dollar was an expected interest rate cut by the U.S. central bank, the Federal Reserve, whose rate-setting committee was due to begin meeting on Tuesday.
Investors were betting the rate cut would help the U.S. economy recover faster than that of the euro zone.
"Views are growing in the market that the rate cut, be it by 25 or 50 basis points, will have a positive effect on the economy," said Mitsuru Sahara, vice president of the forex dealing group at UFJ Bank. "Investors, most of whom were overweight the euro, are cutting their positions."
The euro (EUR=) fell to a low of $1.1538 in morning Asian trade, although it recovered to around $1.1580, up slightly on its late Friday levels in New York.
The European currency traded as low as 136.60 yen (EURJPY=). The dollar was at 118.32 yen (JPY=) at 0600 GMT, a little lower than its Friday New York close.
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Something doesn't quite make sense here. Media hypes up the Euro because of the rate differential, and now they're hyping up the USD because of economic impact of lower rates?
Of course, it's obvious! 1.25% is enough to make the economy stale, while 1.00% will ignite everything and cure everybody's ailments.
July Fed Funds are at 99.125. |
