Euro trading awaits fresh direction

TOKYO: The euro was little moved against other currencies in Asia on Tuesday in quiet late-summer trading, dealers said.

The euro bought $1.2349 and 98.06 yen in Tokyo morning trade, compared with $1.2342 and 97.97 yen in New York late Monday.

The dollar was also flat, trading at 79.37 yen against 79.35 yen in US trade.

"Currency markets continue to struggle with the end-of-summer markets and a dearth of news," National Australia Bank said in a note. "This leaves (the euro) beholden to rhetoric and the vagaries of European news."

Germany on Monday poured cold water on a reported plan by the European Central Bank to set a cap on the borrowing costs of debt-wracked eurozone countries, terming it "very problematic".

The ECB itself dismissed the report as "absolutely misleading", saying no such decision had been taken.

German newsweekly Der Spiegel reported on Sunday that the ECB was planning to set limits on the borrowing costs of individual countries and intervene on the markets to maintain this level.

Spain and Italy have seen their borrowing rates shoot up during the eurozone crisis to levels that forced Greece, Portugal and Ireland to seek bailouts.

But dealers in Tokyo said the euro could yet edge higher against the yen, supported by resilience in euro-dollar trade on optimism that the ECB will eventually step in to buy bonds of troubled eurozone countries.

The embattled common currency could also benefit from the dollar's firmness against the yen caused by a recent rise in US Treasury yields, they said.

The euro "may rise to the higher end of the 98.00 to 99.00 (yen) range", one dealer at a Japanese bank told Dow Jones Newswires. (AFP)