Euro Holds Loss as Europe’s Factories Seen Slowing

The euro remained lower against the dollar before data forecast to show factory activity slowed in Europe’s two biggest economies.

European Central Bank President Mario Draghi said yesterday that further interest-rate cuts are possible after reducing them to a record low last week. The yen rebounded from a three-day decline against the greenback, the longest streak in more than two weeks. The Australian dollar fell against all of its 16 most-traded peers on prospects the central bank may cut borrowing costs to a record low today.

“The euro will probably continue to grind lower,” said Yuki Sakasai, a foreign-exchange strategist at Barclays Plc in New York. “President Draghi made some bold remarks about the possibility of cutting the deposit rate to zero. As Draghi noted, the economic data will be key going forward. Europe is likely to underperform the U.S.”

The euro was little changed at $1.3075 as of 10:23 a.m. in Tokyo from yesterday, when it slid 0.3 percent. It fell 0.4 percent to 129.18 yen. Japan’s currency rose 0.4 percent to 98.96 per dollar, after depreciating 2 percent in the past three sessions.

German factory orders and French industrial production both fell in March from the previous month, according to the median economist forecasts in Bloomberg News surveys. German orders probably slid 0.5 percent, while French activity contracted 0.3 percent.

“We will be looking at all the data that arrives from the euro-area economy in the coming weeks and, if necessary, we are ready to act again,” Draghi said yesterday after the ECB cut its benchmark rate to 0.5 percent last week. He said policy makers had an open mind on a negative deposit rate.

(Source: Bloomberg)