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FOREX-Euro listless on ECB doubts, Aussie looks at RBA
August 21, 2012 / 12:41 AM / 5 years ago

FOREX-Euro listless on ECB doubts, Aussie looks at RBA

* Fresh doubts on ECB action caps euro

* Worries about Greece may resurface this week - strategist

* Aussie clings to channel support ahead of RBA

By Hideyuki Sano

TOKYO, Aug 21 (Reuters) - The euro lacked traction on Tuesday after the European Central Bank brushed aside a media report that it was considering setting yield thresholds for any moves to buy bonds.

A report by German magazine Der Spiegel had earlier boosted the euro by lending weight to the view that the ECB would revive its controversial bond-buying programme. The ECB said it was misleading to report on decisions that had not yet been taken .

Germany’s Bundesbank also stepped up its resistance on Monday to a ECB plan to buy billions of euros worth of Spanish and Italian government bonds to reduce those countries’ crippling borrowing costs.

“The market has been recently cherry-picking only positive factors but I expect a reversal in the next couple of days,” said Daisuke Uno, chief strategist at Sumitomo Mitsui Banking Corp.

The euro stood little changed in early Asian-Pacific trade at $1.2350, stuck in its rough $1.2250-2450 range so far this month.

The Australian dollar held near a key channel line support ahead of the Reserve Bank of Australia’s August policy meeting minutes at 0130 GMT.

It was changing hands at $1.0448, a bit above its three-week low of $1.0411 hit last Friday, though it faces the risk of slipping below a channel line that has acted as support for its rally since early June.

The bank is likely to sound happy with interest rates at 3.5 percent given a resilient domestic economy, though Europe remains a key risk to the global outlook.

Against the yen, the euro stood at 98.00 yen, off a six-week high of 98.40 yen set last week.

Uno said the market is likely to shift its focus back to the difficulties in the euro zone of hammering out bold action as policymakers get down to their business after summer holiday.

Greece is expected to lobby for a two-year extension of austerity measures to soften their impact when its Prime Minister Antonis Samaras meets this week with Chancellor Angela Merkel, French President Francois Hollande and Eurogroup chief Jean-Claude Juncker.

“If Greece and the EU cannot reach an agreement, that could rekindle speculation about Greece’s exit from the euro zone,” SMBC’s Uno added.

The dollar traded at 79.41 yen, off a five-week high of 79.66 yen hit on Monday.

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