* Euro opens steadier after big falls in last two sessions
* Prospect of ECB policy action to keep currency pinned down
* No major Asian data on Monday
By Ian Chua
SYDNEY, May 12 The euro started the week on a
steadier footing after two straight sessions of steep losses,
but should stay under pressure amid the persistent threat of
policy action from the European Central Bank.
The common currency, which plumbed a one-month trough of
$1.3745 on Friday, last stood at $1.3759. It has dropped
more than 1 percent since Thursday when Mario Draghi said the
bank was ready to take action next month should updated
inflation forecasts merit it.
Against the yen, the euro was at 140.15, not far
from a two-month trough of 139.88. On the Australian dollar, it
bought A$1.4698, having touched a one-month low of
Prospect of fresh stimulus from the ECB saw benchmark
Italian and Spanish bond yields fall to record lows on Friday in
a broad-based rally in peripheral euro zone sovereign debt.
Traders said the drop in the euro may be done for now as
investors wait for fresh reasons to sell the currency. They will
be paying close attention to a number of ECB speakers this week
including Vice-President Vitor Constancio.
"The market will seek confirmation of the ECB's willingness
to act," analysts at Barclays Capital wrote in a note to
Investors will also be keeping an eye on developments in
Ukraine amid fears the country is sliding into civil war.
Pro-Moscow rebels on Sunday declared a resounding victory in a
referendum on self-rule for eastern Ukraine.
The setback in the euro helped the dollar index jump to its
highest in over a week at 79.915, a dramatic turnaround
from a 20-month trough of 78.906 plumbed on Thursday. It was
last at 79.859.
The greenback was little changed on the yen at 101.86
, having found good support again in the 101.40 area.
Commodity currencies were also steady, holding onto recent
gains on the U.S. dollar. The Australian currency fetched
$0.9362, still within striking distance of a one-month
peak of $0.9395 set on Thursday.
There is little in the way of major economic releases out of
Asia on Monday. On Tuesday, China's industrial output and retail
sales for April will be the highlight.
(Editing by Shri Navaratnam)