Sunday November 23, 2014 - 23:11:43 GMT
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Reuters - www.reuters.com
FOREX-Euro hobbled by chance of more ECB action, Aussie perkier
* Euro stays under pressure after dovish comments from Draghi
* Aussie holds gains after surprise China rate cut
* Markets seen subdued with Japan shut for holiday
By Ian Chua
SYDNEY, Nov 24 (Reuters) - The euro flirted with a two-year trough against the dollar early on Monday and was broadly weaker as investors gave the common currency a wide berth on prospects of more easing from the European Central Bank.
ECB President Mario Draghi on Friday threw the door wide open for more drastic measures as he painted a bleak picture of the state of the 18 countries in the euro bloc, stressing that "excessively low" inflation had to be raised quickly.
Euro bears were swift to react to his comments on Friday, knocking the currency to a low of $1.2375 from a session high of $1.2569. Selling continued in Asia on Monday, with the euro slipping towards $1.2359, just a whisker away from a two-year low of $1.2358 plumbed earlier in the month.
Trading, though, is expected to be subdued with the Japanese market closed for a public holiday.
"In the aftermath of Draghi's comments on Friday...the market appears to be pricing in some expectation of sovereign quantitative easing at the next ECB meeting in two weeks," said Greg Moore, senior currency strategist at RBC Capital Markets.
Against the yen, the euro fetched 145.77, having dropped from a high of 148.43 on Friday.
The greenback was at 117.81 yen, off a seven-year high of 118.98 set last week. It faded somewhat on Friday after Finance Minister Taro Aso said the yen's recent fall was "too rapid" and undesirable.
The euro nursed heavy losses versus the Australian dollar, which climbed after China surprised with an interest rate cut. It traded at A$1.4239 after shedding nearly 2 percent on Friday.
On the U.S. dollar, the Aussie stood at $0.8679, having climbed 0.6 percent on Friday. Investors were forced to unwind some short positions in the Aussie after Beijing cut rates for the first time in more than two years.
Sources involved in policy making said China's leadership and central bank were ready to cut rates further and also loosen lending restrictions, concerned that falling prices could trigger a surge in debt defaults, business failures and job losses.
There is nothing in the way of market-moving economic data in Asia. In Europe, a report on German business sentiment by the Munich-based Ifo think-tank will take centre stage. (Editing by Marguerita Choy)
© Thomson Reuters 2014. All rights reserved.
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