NEW YORK (Reuters) - The euro slipped from a two-week high against the dollar and yen on Monday as uncertainty about Spain persisted after euro zone ministers said the country did not yet need a bailout.
Rising concern about the global economy after the World Bank scaled back its forecast for East Asia and nervousness about corporate earnings also drove investors into currencies perceived as safe havens.
Euro zone finance ministers delivered a united defense of Spain on Monday, saying the country was taking steps to overhaul its economy, successfully funding itself in the financial markets and did not need a bailout, at least for now.
The meeting comes as investors focused on whether and when Madrid will request aid as it struggles to manage its public finances and recapitalize the country’s banks. EU leaders are scheduled to meet at the end of next week.
The euro showed a muted reaction to the euro zone’s finance ministers meeting. Liquidity was thin because of holidays in Japan and North America.
“Perhaps those types of comments are not necessarily positive for the euro, in the sense that markets are still looking for a Spanish request as the next big step forward for Europe,” said Vassili Serebriakov, currency strategist at Wells Fargo in New York.
The euro fell 0.5 percent to $1.2973. It had hit a two-week high of $1.3071 on Reuters data on Friday after an unexpected drop in the U.S. jobless rate sparked selling of less risky assets such as the dollar and yen. Some $4.13 billion in euros changed hands on Reuters Dealing on Monday.
Against the yen, it lost 0.9 percent to 101.60 yen, retreating from a high of 102.80 on Friday. Traders reported selling by a U.S. investment bank, with a break through its 200-day moving average around 101.75 yen accelerating the move.
Investors were cautious as the third-quarter earnings season gets under way. The reporting season begins on Tuesday with aluminum company and Dow component Alcoa Inc (AA.N).
Another reason to avoid risk came from the World Bank, which cut its growth forecasts for the East Asia and Pacific region, warning that a slowdown in China could get worse.
“There is some general risk aversion stemming probably from numerous reports that Q3 earnings reports will be poor,” said Rabobank analyst Jane Foley.
Some strategists said the potential for positive headlines from this week’s meetings of euro zone finance ministers and the International Monetary Fund could give the euro a boost.
Morgan Stanley advised buying the euro at $1.2950, with a target of $1.3400 and a stop at $1.2870.
The euro has climbed more than 7 percent since hitting a two-year low of $1.2040 in late July, bolstered by hopes of European Central Bank action to help quell the region’s debt crisis.
The higher-yielding Australian dollar dropped to a three-month low before recovering to $1.0196, up 0.2 percent for the day. The Aussie dollar is particularly sensitive to the outlook for Chinese growth.
The World Bank expects China’s economy to grow at a rate of 7.7 percent this year, down from a previous projection of 8.2 percent.
The dollar fell 0.4 percent to 78.32 yen. It reached a session peak of 78.87 yen on Friday, on Reuters data.
“The impression I get is just above 79, there’s a lot of sellers,” said Mitul Kotecha, head of global foreign-exchange strategy for Credit Agricole in Hong Kong.
Reporting By Nick Olivari and Wanfeng Zhou