By Rika Otsuka
TOKYO, April 17 (Reuters) - The dollar held near an all-time
low against the euro on Thursday, after a sharp fall in housing
starts reinforced expectations U.S. interest rates will be cut
again, while record high inflation backed views euro zone rates
will stand pat.
The euro hit a fresh high versus the dollar the previous day
after data showing a record 3.6 percent rise in euro zone prices
in March suggested to investors the European Central Bank will
not cut rates soon. []
The dollar was undermined after data showed that housing
starts dropped by 11.9 percent last month and that March consumer
prices rose a less-than-expected 0.3 percent, supporting
expectations that the Federal Reserve will cut rates by at least
25 basis points to 2 percent in late April. []
"The dollar continues to be weak, while investors chase
currencies whose yields are not seen falling," said Tsutomu Soma,
senior manager of foreign assets at Okasan Securities.
"As there is no sign that the ECB will cut interest rates
soon, the market's focal point is when the euro will rise to the
key $1.6 level," Soma said.
The euro dipped 0.1 percent to $1.5932 <EUR=> from late U.S.
trade on Wednesday, staying within striking distance of the
all-time high of $1.5980 hit on electronic trading platform EBS.
Traders said the euro would likely try the psychologically
key $1.6 level soon, although dealers were expected to take
profits on a euro rally after the single European currency
finally breaches that level.
The dollar climbed 0.3 percent to 102.05 yen <JPY=>,
supported as a rise in U.S. and Japanese shares boosted
investors' appetite for risk.
The Nikkei share average <> climbed 1.9 percent,
tracking an overnight rise in U.S. shares after Intel Corp
<INTC.O>, JPMorgan Chase & Co <JPM.N> and other blue chips
reported earnings that reassured investors worried that a weak
economy would sap corporate profits. []
In early Asian trade, the euro rose as high as 162.80 yen on
EBS, the highest since early January before easing to 162.65 yen
<EURJPY=R>.
BANKS SPOTLIGHTED
Despite a report card from JPMorgan Chase that helped soothe
worries about bank losses, investors remained on the lookout for
more clues about how much the slumping housing market and credit
crunch has hurt profitability at companies.
Analysts said the market will zero in on earnings results
from Merrill Lynch <MER.N> and Bank of New York Mellon <BK.N>
later in the day and Citigroup <C.N> on Friday.
The Wall Street Journal reported earlier this week that
Merrill Lynch would announce fresh asset write-downs of $6
billion to $8 billion when it announces its quarterly earnings.
[]
The Reuters Tankan survey showed on Thursday that confidence
among leading Japanese manufacturers fell to a five-year low in
April as a weak dollar, high raw materials costs and sluggish
domestic demand weighed on their businesses. []
The market showed muted reaction to the monthly survey, which
tracks the Bank of Japan's influential tankan corporate sentiment
survey.
Osamu Takashima, chief forex analyst at Bank of
Tokyo-Mitsubishi UFJ said that all eyes are on negative factors
in the U.S. economy, and investors are ignoring deteriorating
sentiment in Japan.
"The drop in the Reuters Tankan is likely to be a selling
factor for the yen down the road," Takashima said.
(Additional reporting by Shinji Kitamura; Editing by Brent
Kininmont)
