Euro under a cloud in Asia, stocks sit on gains

Wed Jun 11, 2014 2:51am EDT
 
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

By Wayne Cole

SYDNEY (Reuters) - The euro came under mounting pressure on Wednesday as the European Central Bank's embrace of negative interest rates encouraged flows out of the zone, while Asian shares consolidated near recent highs.

The single currency was slipping across the board as investors looked to borrow euros at super-low rates and buy higher-yielding assets abroad, the so-called carry trade.

"The chase for yield looks like it has further to run," said Shane Oliver, head of investment strategy at AMP Capital.

"The ECB’s actions provide a reminder global monetary conditions remain very easy which is supportive of relatively high yield assets and growth assets generally."

In contrast the dollar found support in a run of improving U.S. economic data which pushed up Treasury yields and stoked speculation the Federal Reserve might sound less dovish on policy when it meets next week.

That diverging outlooks shoved the euro down to $1.3536 and further away from a $1.3668 peak scored at the start of the week.

It also hit a seven-month trough on the higher-yielding Australian dollar and to near its lowest against the pound since late 2007.

Action in equity markets was more muted with many indices already having come a long way. MSCI's broadest index of Asia-Pacific shares outside Japan dipped 0.12 percent from a three-year peak.   Continued...

 
A man looks at an electronic board showing graphs of the recent exchange rate movements between the Japanese yen and foreign currencies including the U.S. dollar outside a brokerage in Tokyo May 16, 2014. REUTERS/Yuya Shino