* Euro suffers biggest fall in nearly a year
* Talk of ECB rate cut, growth worries knock euro lower
* Commodity currencies also hit by rising risk aversion
By Ian Chua
SYDNEY, April 18 The euro nursed heavy losses
early in Asia on Thursday, having suffered its biggest one-day
fall in nearly a year on talk of more easing by the European
Central Bank, while commodity currencies remained under pressure
as risk sentiment took a further dive.
The common currency was at $1.3033, little changed
from late trade in New York, where it slid as far as $1.3001
from a high of $1.3200. Its fall of more than 1 percent on
Wednesday was the biggest since June 2012.
"The market is generally in a risk off mode. For the euro,
$1.3000 is going to be the first line of defense on the
downside, that corresponds with the 40-day moving average as
well. Below that is $1.2929, the 200-day moving average," said
Sue Trinh, senior currency strategist at RBC in Hong Kong.
Against the yen, the common currency eased to 127.84
, moving away from Wednesday's high around 129.75.
Already on the backfoot as European shares fell to their
lowest so far this year, the euro took a further hit after ECB
Governing Council member Jens Weidmann was quoted by the Wall
Street Journal as saying the bank could ease further if economic
data warrants it.
"A rate cut in May still looks unlikely on the back of these
comments, albeit not impossible should data deteriorate
markedly," analysts at Commonwealth Bank wrote in a client note.
"However, should the economy underperform into the summer,
with hoped-for recovery looking more distant, further monetary
easing looks increasingly likely. Odds of a June or July rate
cut have increased, but ultimately further stimulus remains
data-dependent in coming months."
Adding to the gloom, oil and copper prices slid to
multi-month lows and Wall Street saw a broad selloff with the
financial sector hit by weaker-than-expected results from Bank
Commodity currencies were not spared and the Australian
dollar slumped back below $1.0300 from near $1.0400 on
Wednesday. It has since recovered a bit of ground to $1.0302.
Investors also sold the Canadian dollar after the
Bank of Canada cut its economic growth forecasts, while data
showing a rise in British unemployment knocked the pound lower.
With the euro and commodity currencies under pressure,
investors turned to the U.S. dollar and even the yen, taking a
bit of pressure off the Japanese currency.
The dollar index, which tracks the greenback's performance
against a currency basket, jumped more than 1 percent to a
one-week high of 82.701, posting its biggest one-day gain
since July 2012.
The dollar edged up to 98.12 yen, remaining within
striking distance of a 4-year peak near 100 yen set last week.
The yen, however, held its ground against most of its major
Traders expect the yen will resume its broad decline in time
given the Bank of Japan's radical stimulus programme, but expect
bouts of short-covering in the near term amid worries about the
health of the global economy.
Just this week, the IMF trimmed forecasts for global growth
given sharp spending cuts in the United States and Europe's
continuing debt crisis.
Global policymakers will discuss the impact of unprecedented
monetary policy easing at meetings in Washington starting
Thursday. Japan is not expected to be scolded for policies that
have led to a sharp slide in the yen.