* Euro nurses more losses after ECB spurs rate cut
* European analysts unconvinced weakness here to stay
* Dollar/yen hovers above 3-week low; down 0.5 pct for the
* Australian dollar slips back from 3-week high
(New throughout, changes dateline from previous TOKYO)
By Patrick Graham
LONDON, May 9 The euro slid further in early
trade in Europe on Friday after strong words from European
Central Bank chief Mario Draghi that halted its march this year
to a 2-1/2 year high.
Draghi said after the bank's policy meeting on Thursday that
the euro's strength was "a serious concern" and that the ECB
bank was "comfortable" with taking more action to support growth
and raise inflation at its June meeting.
This sent the euro down sharply. But many strategists and
traders in London cast doubt on whether it was enough to put a
definitive end to the trend for a stronger euro that has
dominated major currency markets so far this year.
"Draghi's comments have possibly changed the situation for a
while but I'm not sure it has changed the broader picture," said
Neil Mellor, a strategist with Bank of New York Mellon in
He argued that the shopping list of factors that have driven
the single currency's gains were all still in place: a high
current account surplus, banks repatriating of cash ahead of
this year's asset review, a return of cash to southern euro zone
government bond markets and the weakening of China's yuan and
resulting sales of dollars for euros by Beijing.
"It might be that the market will take some more profit (on
the euro's rise) here but I would not be very surprised if come
the end of next week the euro was taking another pop at the
$1.40 level," Mellor said.
The euro fell another 0.1 percent compared with the
end of U.S. trading on Thursday. That took it back to where it
was at the end of last week and in general it remains near the
top of the ranges that have so concerned ECB policymakers in the
past two months.
It hit a peak of $1.3995 on Thursday before Draghi's
comments, its highest since October 2011.
"The debate shifts to what measures the ECB will take and
that will be enough to cap the topside of the euro," analysts
from Belgian bank KBC said in a morning note.
"So, we now look (at) whether Draghi's guidance has enough
credibility to install a sell-on-upticks pattern for the euro."
DOLLAR STEADY ELSEWHERE
If the euro's strength has been this year's big surprise for
markets, then it is largely in the context of the dollar's
failure to make good on the raft of calls in January for it to
Against the yen the dollar was little changed at 101.70 yen
, still not far from a three-week low of 101.43 yen set on
Wednesday. Likewise, sterling held steady at $1.6926 within
striking distance of $1.70 - a level it has not broken since
For the week, the greenback is down 0.5 percent against the
yen, weighed down by persistently dovish comments from the
Federal Reserve and low U.S. Treasury yields.
"If you ask whether dollar/yen is going to head higher or
lower, I think downside risks are increasing," said Satoshi
Okagawa, senior global markets analyst for Sumitomo Mitsui
Banking Corporation in Singapore, adding that the greenback
could head gradually lower against the yen.
Simmering tensions in the Ukraine have also supported the
safe-haven yen currency and the market kept an eye on a May 11
Pro-Russian separatists voted unanimously on Thursday in
favour of holding a referendum on independence, defying calls by
Russian President Vladimir Putin to postpone the vote to open
the way for talks with the Kiev authorities.
The Australian dollar eased 0.1 percent to $0.9364,
edging away from a three-week high of $0.9395 hit on Thursday,
when it gained a lift from upbeat Australian and Chinese
(Additional reporting by Masayuki Kitano in Singapore and
Shinichi Saoshiro in Tokyo; Editing by Toby Chopra)