* Euro dips vs dlr, not far from Friday's 2-1/2 month low
* Single currency hampered by weak euro zone data
* Dollar index hovers near Friday's 6-month high
By Masayuki Kitano
SINGAPORE, March 4 The euro hovered near a 2-1/2
month low on Monday while the dollar stayed close to a six-month
high versus a basket of currencies as signs of improvement in
the U.S. economy stood in stark contrast to a series of weak
euro zone data.
Broad U.S. spending cuts that automatically kicked in on
Friday and threatens to dampen economic growth did little to
curb the dollar, which was supported by data released on Friday
that showed a pick-up in U.S. manufacturing activity.
Data out of the euro zone painted a bleak picture, with
business surveys released on Friday showing that European
manufacturing appeared no closer to recovery in February, while
official data showed that unemployment in the currency union hit
a new high of 11.9 percent in January.
"The U.S. is not looking particularly good, but in
comparison (to the euro zone) it's looking somewhat better,"
said Rob Ryan, strategist for RBS in Singapore.
The dollar index stood at 82.334, having hit a high
of 82.509 on Friday, its strongest level in more than six
The euro slipped 0.1 percent to $1.3011, not very far
from Friday's low of $1.2966 set on trading platform EBS, the
single currency's lowest level since Dec. 11 and its weakest in
more than 2-1/2 months.
"A recent characteristic of the euro is that it seems to be
increasingly traded on the back of fundamental economic data
such as the unemployment rate, production, and GDP figures,"
said Daisuke Karakama, market economist for Mizuho Corporate
Bank in Tokyo.
The single currency has retreated over the past month since
hitting a high of $1.3711 on Feb. 1, and has come under added
pressure after an inconclusive election in Italy in late
February raised the risk of prolonged political instability in
the euro zone's third biggest economy.
The single currency now looks vulnerable on the daily
Ichimoku chart, a popular technical analysis tool. The euro fell
below the bottom of the daily Ichimoku cloud at $1.3085 and
closed below that level on Friday, in a bearish technical
Against the yen, the dollar eased 0.1 percent to 93.57 yen
Expectations of more aggressive monetary easing by the Bank
of Japan had prompted investors to push the yen down to a
33-month low of 94.77 yen per dollar last Monday, and many
traders expect the Japanese currency to retain a downward bias.
The Japanese government last week nominated Asian
Development Bank President Haruhiko Kuroda, an advocate of
aggressive monetary policy action, as the next BOJ governor to
succeed Masaaki Shirakawa. Shirakawa will step down later in
Speaking at a confirmation hearing in parliament on Monday,
Kuroda said an end to deflation in Japan will help Asian
economies and the global economy. Kuroda added that the BOJ must
take whatever steps necessary to achieve 2 percent inflation as
soon as possible.
The yen showed limited initial reaction to Kuroda's