* Euro struggles near one-year lows vs USD in light trade
* U.S. holiday dampens market activity
* Aussie resilient, RBA seen keeping steady policy stance
By Ian Chua
SYDNEY, Sept 2 The euro languished at one-year
lows early on Tuesday, following an aimless session overnight
with market activity severely hampered by a holiday in the
The common currency last traded at $1.3129, having
drifted in a slim $1.3119/1.3146 range for all of Monday. That
helped keep the dollar index near a 13-1/2 month peak of 82.804
Against the yen, the greenback held just below a one-week
high of 104.36. The euro dithered at 136.94,
not far from a two-week low of 136.42 set last Thursday.
The deepening crisis in Ukraine and the risk of an imminent
policy easing by the European Central Bank (ECB) have combined
to pin the euro down.
Data on Monday showed euro zone factories barely increased
prices last month, and manufacturing activity in France fell at
the fastest pace in 15 months. A separate report confirmed the
German economy contracted for the first time in over a year in
the second quarter.
That should keep alive the possibility of fresh stimulus
from the ECB as early as Thursday. French President Francois
Hollande and ECB President Mario Draghi agreed on Monday that
deflation and weak growth were threatening the European Union's
economy, an official in the president's office said.
Indeed, persistent speculation the ECB will have to embark
on a bond-buying program in the footsteps of the Fed and Bank of
Japan have seen euro zone bond yields fall sharply. Both German
and French 2-year yields are now below zero
In the local trading session, a policy review by the Reserve
Bank of Australia will take centre stage, although no one
expects the central bank to adjust the current interest rate
"A mention of the improved investment outlook could be
warranted, and may provide some support for the AUD," said Emma
Lawson, senior currency strategist at National Australia Bank.
"The RBA Governor was relatively comfortable about the
on-hold outlook at the Government Economics Committee hearing
last month, and it would be a surprise for there to be much new
information at today's meeting and statement."
The Aussie last traded at $0.9333, just off last
week's three-week peak of $0.9374. It has been surprisingly
resilient in light of disappointing surveys that showed growth
in its largest trading partner, China, may be faltering again.
The ISM report on the U.S. manufacturing sector due later in
the day is shaping up to be the next major focus. There is a
good chance that it would further highlight the diverging
monetary policy pathway between the United States and euro zone.
(Editing by Richard Pullin)