TOKYO- The euro was steady in Asia on Friday after tumbling on a warning about the eurozone economy by the head of the European Central Bank, while the dollar rose against the yen ahead of the release of US jobs data.
The euro bought $1.3607 against $1.3606 in New York Thursday. The unit tumbled at one point Thursday to as low as $1.3548 soon after ECB chief Mario Draghi said the eurozone remained “fragile” and pledged action to ward off deflation or a credit crunch.
The single currency also fetched 142.69 yen in Tokyo morning trade, against 142.58 yen — after diving to 142.00 yen at one point Thursday. The dollar rose to 104.88 yen from 104.79 yen.
With the US Federal Reserve holding its next policy meeting at the end of the month, investors are waiting for the government’s non-farm jobs data later Friday to see if it will give the central bank more ammunition to further cut its stimulus.
The Fed’s most recent meeting saw it reduce its bond-buying scheme by $10 billion a month to $75 billion from January, citing a pick-up in the world’s number one economy.
In Europe the ECB held kept interest rates on hold, but Draghi said it was too early to hail an end to the region’s recent crisis, adding that bank was ready to act again to counter another downturn.
The ECB took markets by surprise in November and pared its refinance rate by a quarter of a percentage point, citing expectations that the single currency area is facing a prolonged period of very low inflation.
Despite Draghi’s dovish comments, he dismissed concerns the eurozone was facing possible deflation — a vicious circle of falling prices — even if price rises are expected to remain well below target for the next two years.
“This easing bias took the euro lower in the first instance, but it
subsequently recovered,” National Australia Bank said.
“But, with the US payrolls expected to do better, the contrast between the ECB and the Fed is increasing. Thus we would expect the common currency to underperform.”