* Weidmann says ECB may cut rates if economy weakens - WSJ
* G20 meeting seen unlikely to criticise BOJ policy
* Canadian dollar slumps after BOC cuts growth forecast
By Wanfeng Zhou
NEW YORK, April 17 The euro tumbled against the
dollar and yen on Wednesday after comments from a European
Central Bank official stoked speculation of an interest rate cut
in the euro zone.
The yen slipped against the dollar a day before the Group of
20 economies meets in Washington. Analysts said recent comments
from G20 officials suggest the group as a whole will not
criticize Japan's aggressive monetary easing that has triggered
a sharp slide in its currency.
The ECB could lower interest rates further if economic data
so warrants, ECB Governing Council member Jens Weidmann was
quoted by the Wall Street Journal as saying on Wednesday.
"The ECB is a central bank that likes to prepare the market
for any potential changes in monetary policy and that is why
Weidmann's comments are so important because it could be the
first of many to follow," said Kathy Lien, managing director at
BK Asset Management in New York.
The euro fell 1 percent to $1.3040, having hit a
session low of $1.3035, according to Reuters data. Support lies
around $1.3020, the low set on Friday, and a break could open
the door for a decline towards $1.30 and below.
The ECB decided to leave interest rates on hold at its April
policy meeting, but ECB President Mario Draghi said the bank
would "monitor very closely" all data and stand "ready to act"
to boost the recession-hit euro zone.
Recent economic data has underscored a challenging outlook
for the euro zone economy. Inflation in the euro zone eased
further in March, while analyst and investor sentiment in
Germany, the bloc's largest economy, fell sharply in April.
The euro also came under pressure after a media report cited
former member of the ECB Executive Board Lorenzo Bini Smaghi as
saying the central bank should find ways to stop the euro from
Against the yen, the euro fell 0.9 percent to 127.32 yen
The dollar rose 0.1 percent to 97.59 yen, although it
remained well below the four-year high of 99.94 yen set on
Reuters data last week.
"Dollar/yen has moved a bit higher, trying to hold the 98
level, as traders now expect that the G20 meeting later this
week will not be as 'difficult' for the Japanese delegation as
first suspected," said Matthew Lifson, senior trader and analyst
at Cambridge Mercantile Group in Princeton, New Jersey.
"Most predictions for the dollar/yen still expect a test of
the 105.00 level by mid-summer as 'Abenomics' continues in
Japan," he said, referring to Japan's new push to ease monetary
policy under prime minister Shinzo Abe.
The Canadian dollar tumbled after the Bank of Canada cut its
growth forecast and left interest rates unchanged. The U.S.
currency rose 0.7 percent to C$1.0274.