* Spike in NZ jobless rate knocks wind out of the kiwi dlr
* ECB, Spanish bond sale in focus
* Japanese markets on holidays, back Monday
By Masayuki Kitano and Ian Chua
SINGAPORE/SYDNEY, May 3 The euro wallowed near
two-week lows against the greenback on Thursday, having fallen
sharply overnight on the back of more depressing economic news
out of Europe that has put the spotlight on the central bank's
policy meeting later in the day.
The single currency eased 0.1 percent to $1.3145. It
fell as low as $1.3122 on Wednesday after data showed more
weakness in Europe's manufacturing sector. Immediate support is
seen around $1.3104, the April 23 trough.
With recently downgraded Spain looking to raise funds in the
bond market on Thursday, the European Central Bank will be under
pressure at its policy meeting to do more to shield weaker euro
zone members from additional pain.
"It seems too early for another wave of easing, but that is
where the risks are skewed. The outcome is continued downward
pressure on EUR/USD," said Sebastian Galy, strategist at Societe
But diversification demand out of the greenback had kept the
euro far better bid than it should, he said.
"We still like it to break below 1.30 and still expect to be
burned out of this view before it does happen," suggesting such
a move could take some time.
Spain will hold an auction of three- and five-year bonds on
Thursday in the first Spanish government bond sale since
Standard and Poor's cut Spain's credit rating by two notches to
BBB+ last week.
The ECB meeting and the Spanish bond auction may pose some
downside risk to the euro, especially when considering how the
market is now positioned, said a trader for a major Japanese
bank in Singapore.
Market players had put on short-dollar and long-euro bets
after U.S. Federal Reserve Chairman Ben Bernanke hinted last
week at the possibility of further monetary easing, the trader
said, adding: "We could see a little more downside (in the euro)
due to position unwinding."
Renewed pressure on the euro saw the dollar index pop
back above 79.000, putting further distance from a two-month
trough of 78.603 plumbed on Tuesday.
Against the safe-haven yen, the dollar held steady at 80.16
yen, having retreated from Wednesday's high of 80.61 and
bringing in focus a 10-week low of 79.64 set on Tuesday.
Among commodity currencies, the New Zealand dollar saw a bit
of action after a sharp jump in the local jobless rate caused
markets to price in a small chance of a rate cut this year, a
dramatic turnaround from just a couple of weeks ago.
The kiwi slid as far as $0.8040, lows not seen
since late January. After trimming some of its losses, the kiwi
stood at $0.8054, down 0.4 percent.
A closer look at the jobs data, however, showed the rise in
the unemployment rate was due mostly to a surge in the number of
people looking for jobs, which is not a bad thing according to
Still, the market is implying a 40 percent chance of a rate
cut at the RBNZ's next policy meeting.
"For the RBNZ, if they are going to do anything this year it
will be a rate cut. There's a lot of global risks still, and
with the NZ dollar where it is, it makes sense for the market to
price in some chance of an easing," said Ben Jarman, economist