Euro struggles against dollar, most Asia markets slip
HONG KONG: The euro tumbled against the dollar on Thursday as dealers bet on fresh stimulus from the European Central Bank later in the day, while most Asian stock markets fell following the previous day’s gains.
Asian energy firms tracked losses in their US counterparts as a supply glut and strong dollar weigh on oil prices ahead of a key meeting of the OPEC oil cartel.
The greenback rallied Wednesday in New York after Federal Reserve boss Janet Yellen said she considered the US economy strong enough to withstand an interest rate rise. Her comments virtually assure a hike at its next policy meeting this month following a slew of mostly strong data. The dollar jumped against the yen and euro in US trade. While the dollar eased against the yen in Tokyo, it extended gains against the European single currency as the ECB prepares to loosen its hold on monetary policy and is now at levels not seen for more than seven months.
Some analysts predict the greenback to reach parity with the euro in the new year. “There’s a lot of anticipation of ECB easing and it seems to be pretty much the consensus that it will happen,” Shane Oliver, head of investment strategy in Sydney at AMP Capital Investors, said.
“The US economy has had the training wheels support of ultra-easing monetary policy, and suddenly they’re being told by their parent — the Fed — it’s time to take them off. Naturally, the markets, like the child, are feeling nervous.”
Oil prices plunged Wednesday after official figures out of Washington showed another sharp rise in US stockpiles and production, suggesting demand remains sluggish.
US benchmark West Texas Intermediate sank 4.6 percent falling below $40 a barrel for the first time since August and Brent North Sea crude dived 4.4 percent.