WORLD FOREX: Euro Stable After Slipping On Lack Of EU Progress

Thursday, May 24, 2012

-- Euro stable vs dollar, yen after slipping earlier

-- Lack of concrete progress at EU summit suggests no end to euro-zone crisis in sight

-- Market focus turns to euro-zone PMI, U.S. weekly jobless claims


 
   By Kosaku Narioka 
   Of DOW JONES NEWSWIRES

TOKYO (Dow Jones)--The euro was stable against the dollar and yen Thursday in Asia after a summit of European Union leaders showed little progress, denting the common currency earlier in the Asian session.

With the market focusing on the euro-zone turmoil, data showing Chinese manufacturing activity slowing was largely shrugged off.

Market participants saw the apparent lack of consensus among European heads of state on how to deal with the region's debt crisis as a sign the market turmoil is set to continue.

At the conclusion of the informal summit, European Union leaders reiterated that they supported Greece's continued euro membership as long as the country honors its commitments to fiscal consolidation and structural reform.

Meanwhile, recent calls for some form of euro-zone debt issuance to further strengthen the region's integration ran into opposition, with a number of leaders saying the idea was premature or counterproductive.

"We had different points of view concerning euro bonds," German Chancellor Angela Merkel said after the summit. "I laid out the German position that we need much stronger economic coordination in the euro zone." She added that the group had a "balanced discussion" on the issue.

Although traders hadn't expected any significant breakthrough at the summit, signs that countries remain deeply divided on how to tackle the crisis prompted them to sell the common currency.

European leaders "are speaking about the same subject, but what they are saying is so different from each other," said Yuji Saito, director of foreign exchange at Credit Agricole Bank in Tokyo.

"Although the market in Asia regained some calm, risk-aversion will likely intensify again as European participants come in later," said Osao Iizuka, head of FX trading at Sumitomo Mitsui Trust Bank.

Earlier in the day, the preliminary HSBC China manufacturing purchasing managers index fell to 48.7 in May compared with a final reading of 49.3 in April, HSBC Holdings PLC said.

The market focus is on the euro-zone PMI data for May, and U.S. weekly jobless claims to be released later in the global day.

"Concerns over Europe will likely continue mid-to long-term," Sumitomo Mitsui Trust's Iizuka said. "Even if some solid (PMI) data cause position adjustment and short-squeeze temporarily, the euro will likely test lows again soon."

The euro was at $1.2572 as of 0450 GMT from $1.2582 late Wednesday in New York and was at Y99.92 from Y100.01, according to EBS.

The U.K. pound was at $1.5683 from $1.5693.

The dollar was at Y79.48 from Y79.47 and was at CHF0.9551 from CHF0.9549.

The ICE U.S. Dollar Index, which tracks the dollar against a basket of currencies, was at 82.091 from 82.047.


 
Interbank Foreign Exchange Rates At 00:50 EST / 0450 GMT 
 
 
                           Latest       Previous   %Chg    Daily    Daily   %Chg 
Dollar Rates                               Close            High      Low  12/31 
 
 
USD/JPY Japan            79.46-50       79.47-51  -0.01    79.57    79.42  +3.33 
EUR/USD Euro            1.2571-74      1.2580-83  -0.07   1.2598   1.2556  -2.99 
GBP/USD U.K.            1.5679-84      1.5688-93  -0.06   1.5701   1.5678  +0.90 
USD/CHF Switzerland     0.9551-56      0.9544-48  +0.08   0.9564   0.9534  +1.93 
USD/CAD Canada          1.0257-62      1.0249-53  +0.08   1.0263   1.0240  +0.49 
AUD/USD Australia       0.9740-44      0.9744-48  -0.04   0.9770   0.9726  -4.57 
NZD/USD New Zealand     0.7510-16     0.7495-503  +0.18   0.7528   0.7490  -3.39 
 
Euro Rate 
EUR/JPY Japan            99.92-96      99.98-100  -0.06   100.16    99.74  +0.38 
 
Source: ICAP Plc.