Battered euro limps off lows

By Ian Chua

SYDNEY (BestGrowthStock) – The euro earned a reprieve early in Asia on Thursday, lifting off a two-month trough after three straight sessions of falls, but with the euro zone debt crisis still festering any rebound may well prove short-lived.

Ireland unveiled an ambitious austerity plan to tackle its debt crisis and secure an international bailout on Wednesday, which some analysts said was a step in the right direction.

But already the plan’s credibility has come under fire for sticking to economic growth assumptions, unveiled earlier this month, seen as too optimistic.

The euro, which plumbed a low around $1.3284 after piercing through support around $1.3333 overnight, staged a modest rebound back to $1.3344 in Asia.

Next support is pegged at $1.3232, the 61.8 percent retracement of the August to November rally, a break of which could see the single currency target $1.3000.

Against the Japanese currency, the euro bounced off the session low of 110.26 yen, a level last seen in mid-September, to last stand at 111.47.

“With the U.S. on holiday, and CDS spreads across the PIGS holding in below recent record highs, risk appetite may crawl back in the days ahead to at least stabilize EUR/USD,” said Peter Frank, strategist at Societe Generale.

“But, with the Irish government also admitting that the IMF/EU EFSF talks may last weeks, we find no viable reasons to buy the EUR at this point.”

U.S. markets are shut on Thursday for the Thanksgiving holiday.

The dollar index (Read more about the global trade. ) (.DXY: ), which tracks the greenback’s performance against a basket of major currencies, flirted with a two-month high just short of 80.000 overnight and was last at 79.701.

The dollar rose to 83.66 yen from a session low of 82.92 and last traded at 83.53 yen.

The greenback was further aided by U.S. data showing a fall in new claims for jobless benefits to two-year lows and another rise in consumer spending, suggesting the U.S. economy is nearing a self-sustaining recovery.

Those figures helped spur a rally on Wall Street, boosting risk appetite and benefiting commodity currencies such as the Australian dollar.

The Aussie dollar popped above $0.9800, having traded near $0.9700 earlier this week. It was last at $0.9832.

The euro sank 1.4 percent to a record low of A$1.3556, shattering previous troughs in the A$1.3640/50 zone.

“Commodities had a good night, equities had a good night, volatility is low, so that’s typically good news for the Aussie dollar,” said Joseph Capurso, strategist at Commonwealth Bank.

Heightened tensions in the Korean Penninsular proved to have only a fleeting influence on currency markets with the situation appearing to have stabilized for now.

The United States said it believed North Korea’s shelling of a South Korean island this week was an isolated act tied to leadership changes in Pyongyang. It also called on China to use its influence to stop the North’s provocative behavior.

The dollar fell to 1,146.95 won on Wednesday, having jumped to 1,170.90 won when investors dumped the won.

“We believe that once the dust settles following Tuesday’s events, supportive currency fundamentals will reassert themselves, leading the currency to rally,” Barclays Capital analysts wrote in a note.

“Coupled with mounting import price pressures, we maintain our view that USD/KRW will drift lower toward 1,050 in 12 months and 1,025 by end-2011.”

(Editing by Wayne Cole)

Battered euro limps off lows