* Focus on Ifo survey after weak flash PMI for Germany
* Talk of ECB rate cut keeping lid on euro vs dollar
* Aussie sags on softer-than-expected inflation data
* Dollar/yen stays below elusive 100 level
By Masayuki Kitano
SINGAPORE, April 24 The euro held steady on
Wednesday, clinging above a two-week low set the previous day,
but the single currency could face more selling pressure as soft
euro-zone data has bolstered expectations of an interest rate
cut by the European Central Bank.
The euro was fetching $1.3002. The single currency
had hit a two-week low of $1.2973 on Tuesday in light of a
survey showing a sharp drop in German business activity in
The Munich-based Ifo think tank's survey of German business
morale for April due later on Wednesday is the market's next
"If the Ifo is weak that could provide further data-based
validation for the recent speculation that there might be a rate
cut in May," said a trader for a Japanese bank in Bangkok,
referring to market chatter about a possible ECB rate cut.
"If it turns out to be weak, the market reaction could be
pretty large," the trader said, adding that market players
seemed to be focusing on signs of economic weakness in Germany.
The downbeat reading of German business activity in Markit's
flash composite Purchasing Mangers' Index (PMI), released on
Tuesday, had driven projections of key euro zone bank-to-bank
Euribor lending rates for 2015 and 2016 to record lows, as
traders increased bets that the ECB may cut interest rates and
keep them low for a long time.
In addition, recent comments from ECB policymakers about
slowing inflation and poor growth prospects in the euro zone
suggested the central bank may be leaning towards a cut in its
main refinancing rate, which stands at a record low 0.75
One factor that may temper any market reaction in the event
of a weak Ifo reading is the fact that the euro has already
priced in the possibility of an ECB rate cut to some degree,
said Mitul Kotecha, Hong Kong-based head of global foreign
exchange strategy for Credit Agricole.
"Markets have moved around to the view that the ECB will cut
rates. We're looking for a cut in May. So to some extent the
euro is pricing that in," Kotecha said.
"The momentum I still think is for a lower euro, but I don't
see a slide in the currency," he said, adding that one possible
short-term support for the euro lies at the April 8 intraday low
Although the euro has retreated against the dollar from last
week's high near $1.3200, the single currency has climbed on
some of the crosses in recent sessions, and hit a one-month high
versus the Swiss franc on Wednesday.
Against the yen, the euro was little changed at 129.32 yen
The dollar was steady at 99.48 yen, having pulled
back from the day's high of 99.77 yen.
A trader for a Japanese bank in Bangkok said yen-buying by
options players, institutional investors as well as Japanese
exporters blocked the dollar's earlier rise and prevented it
from reaching the elusive 100 yen level.
The greenback had scaled a four-year high of 99.95 yen
earlier this month after the Bank of Japan unveiled its sweeping
monetary stimulus programme.
The Australian dollar fell 0.2 percent to $1.0252,
staying heavy after softer-than-expected inflation data
encouraged investors to wager on a further cut in Australian
The New Zealand dollar found support after the Reserve Bank
of New Zealand gave a relatively upbeat assessment on the
As expected the RBNZ left interest rates at a record low 2.5
percent and said they would stay there for the rest of the year.
The New Zealand dollar last stood at $0.8445, off a
three-week low of $0.8360 tapped on Tuesday.