* Euro stop-loss orders said to lie below $1.2475
* Aussie skids to 6-week low on China slowdown fears
By Lisa Twaronite
TOKYO, Sep 5 (Reuters) – The euro dipped slightly against
the dollar in Asian trading on Wednesday, but support for the
single currency stayed intact a day ahead of a European Central
Bank meeting that is expected to unveil more details of a
long-awaited debt-buying plan.
The European unit was down 0.3 percent at $1.2526,
off its Tuesday session high of $1.2629 but still not far from
Friday’s high of $1.26378 on trading platform EBS, which was its
strongest level since early July.
In early Asian trading, the euro bumped through stop-loss
orders which were said to have been placed at Tuesday’s low of
$1.2555, as well as at $1.2550, which was a 50 percent
retracement of its recent rise from $1.2465 on Aug. 28 to
Friday’s high. Further stops were said to lie below $1.2475.
The drop was limited as investors awaited the ECB’s plan,
which is likely to focus on buying shorter maturities to bring
down soaring bond yields of southern euro zone countries.
“The euro is finding the going a little bit easier. The
prospect of the collapse of the euro is becoming a distant
memory with many former bears,” said Andrew Wilkinson, chief
economic strategist at Miller Tabak & Co.
ECB President Mario Draghi told European lawmakers on
Monday that purchases of short-term sovereign bonds to help
debt-burdened countries like Spain and Italy would not breach
European Union rules, according to a recording obtained by
Reuters.
The euro “is range bound but seems to be quite well
supported. The high expectations for the ECB meeting on Thursday
remain after Draghi’s closed-door meeting on Monday,” Wilkinson
said.
Still, fears that the ECB could disappoint and trigger a
further euro correction prompted some investors to take profits
on its recent gains.
“Some investors are wary that the euro’s rally ahead of the
ECB meeting will turn out to be, ‘buy the rumour, sell the
fact,” with so many key details of the debt-buying plan still
unclear, such as volume,” said Kimihiko Tomita, head of foreign
exchange for State Street Global Markets in Tokyo.
Some have said that unless the ECB sets no limits on its
bond purchases, investors could pile in to dump paper on the
bank, threatening the success of the plan.
The euro also lost ground against the yen, down 0.4 percent
to 98.14 yen.
MORE WEAK U.S. DATA
Apart from the ECB meeting on Thursday, key U.S. data this
week will come on Friday, when the monthly employment report is
expected to show employers increased payrolls by 125,000 workers
last month, down from July’s 163,000.
The dollar was steady against its Japanese counterpart at
78.38 yen.
The Australian dollar slipped 0.3 percent to $1.0190
after dropping to a six-week low of $1.0182 on growing
speculation the Reserve Bank of Australia will cut interest
rates to cushion the economy from falling commodity prices.
Government data on Wednesday showed Australia’s gross
domestic product rose 0.6 percent in the second quarter, at a
slower pace from the previous quarter when it jumped 1.4
percent.
Australia’s central bank held rates steady on Tuesday as
widely expected, though a slowdown in China has left the
country’s commodity-fuelled economy vulnerable.
