Euro stays weak amid eurozone debt fears

January 6, 2012
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, TOKYO, Jan 6 – The euro faced further selling pressure in Asia Friday due to intensifying fears over the European sovereign debt crisis.

The single currency fetched $1.2787 in Tokyo afternoon trade after sinking in New York late Thursday to as low as $1.2771 — its lowest point since September 2010.

It was also at 98.71 yen after falling to an 11-year low of 98.48 yen in New York.

The dollar was at 77.18 yen, compared with 77.18 yen in New York.

The euro will likely face a ceiling at $1.2850 even if short-covering kicks in after Thursday’s tumble, Osao Iizuka, head of FX trading at Sumitomo Trust and Banking, said.

“The upside will be heavy and any rebound should be limited,” he told Dow Jones Newswires, adding activity would be limited during Asian trade ahead of the US December non-farm jobs report due later in the day.

A senior dealer at a Japanese bank expected euro-selling demand to persist on the back of growing pressure on European banks to reduce their sovereign debt holdings.

Dealers said sentiment was hit badly Thursday after Spain’s economy minister warned that the country’s banks could need 50 billion euros to cover bad loan losses.

A surprise visit by Italian Prime Minister Mario Monti to Brussels also stoked fresh uncertainty, although diplomatic sources in Belgium said his trip was completely private.

US data released from a private payrolls firm showing more jobs than expected were created last month added to hopes that the economy is picking up, which has boosted the dollar.

Against other Asian currencies the dollar was mostly higher. It firmed to 1,159.40 South Korean won from 1,150.30 on Thursday, to 44.09 Philippine pesos from 43.91, and to 31.63 Thai baht from 31.52.

The dollar edged up to 9,155.00 Indonesian rupiah from 9,150.00 and to Sg$1.2936 from Sg$1.2878, but it fell to Tw$30.20 from Tw$30.26.

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