* Euro dips vs dlr, not far from Friday's 2-1/2 month low
* Single currency hurt by weak euro zone data
* Growing bets on ECB rate cut this week
By Anooja Debnath
LONDON, March 4 The euro fell against the dollar
on Monday as concerns about the weak euro zone economy fuelled
speculation the European Central Bank could cut interest rates
in the coming months.
Although market consensus is for the ECB to keep rates on
hold on Thursday, some strategists say poor manufacturing survey
and unemployment data last week could prompt bank chief Mario
Draghi to hint at future cuts.
"The euro is down on a general risk-off mood as markets look
for a little bit more safe haven. Draghi could be more dovish
and there could be a rate cut this week. If not, he could signal
something is in the offing," said Jane Foley, senior currency
strategist at Rabobank.
The euro was down 0.1 percent on the day at $1.3005,
off Friday's low of $1.2966 set on trading platform EBS, its
lowest since Dec. 11. A reported options barrier at $1.3000
could act as near-term support.
The fallout of Italy's inconclusive election last week
continued to weigh on the euro, with analysts concerned that
without a stable government, the euro zone's third largest
economy will be unable to pass reforms required to get its
borrowing and debt under control.
"Italy's lack of a government adds to the weight on the euro
from disappointing data which will mean Draghi can no longer
dismiss rate cut talk," said a trader at an Australian bank,
adding that the euro could touch $1.27/$1.28 in the coming
Markets will keep an eye on a meeting where the Eurogroup of
euro zone finance ministers will discuss a bailout for Cyprus on
Monday, though no final deal is expected.
The gloomy euro zone data contrasted with a jump in U.S.
manufacturing and this helped push the dollar to a six-month
high of 82.509 against a basket of currencies on Friday .
It last stood at 82.334, up 0.03 percent on the day
Broad U.S. spending cuts that automatically kicked in on
Friday and threaten to dampen economic growth have so far not
hurt the U.S currency.
In fact, currency speculators' bets in favour of the dollar
surged in the week ending Feb. 26.
On the other hand, they bet against the euro after last
week's poor February business survey data and with unemployment
in the currency bloc hitting a new high in January.
The yen showed limited reaction to comments from Haruhiko
Kuroda, the Japanese government's nominee as the next Bank of
Japan governor, who set out aggressive policy ideas on Monday.
The dollar was up 0.1 percent at 93.63 yen
"The comments that have come out today are in line with
expectations and have not triggered renewed selling of the yen.
They didn't contain any big disappointments either," said a
trader from a Japanese bank in Bangkok.
Kuroda, president of the Asian Development Bank and an
advocate of aggressive monetary easing, would replace incumbent
Masaaki Shirakawa, who is due to leave office on March 19.