* Euro hits lowest in almost a month vs dollar
* Dented by view ECB edging closer to unconventional easing
* Many major financial centres shut for Easter weekend
By Charlotte Cooper
TOKYO, April 10 (Reuters) - The euro slipped to its lowest in
almost a month against the dollar on Friday, dented by holiday
trade and views that the European Central Bank may be edging
closer to unconventional easing, while the greenback lost early
buoyancy against the yen.
With the United States and much of Asia and Europe on
holiday, traders said the euro had been pressured by closing of
long positions ahead of the long weekend.
ECB President Jean-Claude Trichet said on Thursday the ECB
still had some leeway to cut its main interest rate from its
record low of 1.25 percent.
He repeated it would lay out plans for possible
unconventional monetary policy measures at its next meeting in
May. He did not give details, but another ECB official said
buying debt could ease credit availability. []
The market has been watching for signs the ECB will take
unconventional steps to improve credit after similar moves by the
Federal Reserve and other major central banks to keep longer-term
interest rates down and help lift their economies from recession.
"Speculation on the ECB's further rate cuts and the
possibility of its adopting quantitative easing are weighing on
the euro, prompting investors to take profits on its recent
gains," said Akira Takeuchi, a manager at Chuo Mitsui Trust and
Banking.
As investors have grown more confident in recent weeks and
stock markets have rallied, the euro and higher yielding
currencies such as the Australian dollar have risen too, only to
retreat when investor confidence ebbs.
"The euro, or yen crosses, seem to be breaking from the
rising pattern with stock gains. That may suggest a new trading
theme is emerging," said Minoru Shioiri, chief manager of FX
trading at Mitsubishi UFJ Securities.
"But it's hard to tell at this point, because the move could
be just a temporary blip in a holiday-thinned market."
The euro fell 0.2 percent to $1.3138 <EUR=>, after dipping as
low as $1.3090 -- a level not seen since mid-March when the Fed
shocked markets by announcing it would start large-scale buying
of long-term government debt and sent the dollar down sharply.
Against the yen, the euro slipped 0.2 percent to 131.85
<EURJPY=R> after hitting its highest in almost six months on
Monday at 137.42.
STOCKS RALLY
The dollar gained 0.8 percent against the yen on Thursday,
buoyed by a rally in U.S. stocks following positive earnings
guidance from U.S. bank Wells Fargo <WFC.N>.
Wall Street indexes rose between 3 and 4 percent after Wells
Fargo said it expected to report a record quarterly profit in an
encouraging sign for the troubled banking sector, which has been
at the heart of the global financial crisis. []
The greenback initially extended those gains in early Asian
trade on expected demand from Japanese companies at the Tokyo
fixing at 0100 GMT, traders said.
But with the fixing out of the way, it drifted down to lose
0.1 percent on the day at 100.36 yen <JPY=>.
It hit its highest in six months at 101.45 yen early in the
week but then faced a bout of profit-taking ahead of the long
weekend and the onset of quarterly earnings.
The yen, which has slid in recent weeks as rising investor
confidence has seen it sold in part to fund short-term yield
plays, was steady against the Australian and New Zealand dollars.
Financial shares will be a market focus next week as several
large U.S. banks report quarterly earnings such as Goldman Sachs
<GS.N> JPMorgan Chase & Co <JPM.N> and Citigroup Inc <C.N>.
"The market has already priced in to some extent some
positive news in earnings next week. So the market may react more
to negative surprises," said Takeuchi at Chuo Mitsui Trust and
Banking Co.
The U.S. Treasury has asked banks not to mention regulatory
"stress tests", designed to determine their capital needs under
adverse economic conditions, when they report their results, a
source said on Friday. []
The results are expected to be released at the end of April.
Fed policy-makers warned that the U.S. economy would skid
more deeply into recession in the coming months but said it was
time to start planning how to wind down spending to avert an
inflationary surge. []
The number of U.S. workers filing new claims for unemployment
benefit fell last week but was still at levels indicating
contraction in the labour market has yet to hit bottom.
[].
(Additional reporting by Kaori Kaneko and Satomi Noguchi;
Editing by Michael Watson)
