By Satomi Noguchi
TOKYO, April 1 (Reuters) - The euro fell against the dollar
and the yen on Tuesday after European bank UBS AG <UBSN.VX> said
it wrote down an additional $19 billion on assets, stoking
worries that credit market turmoil will spread into the European
financial sector.
The European bank said the write-down would cause a net loss
of 12 billion Swiss francs ($12.03 billion) in the first quarter
and it would seek 15 billion francs in new capital through a
rights issue of shares. []
"Sentiment for the euro was dented by the news about UBS, but
it looks to be a corrective move," said a trader at a Japanese
trust bank.
The euro was down 0.3 percent at $1.5725 <EUR=>. It slipped
0.4 percent against the yen to 156.75 <EURJPY=R>.
The dollar had registered its biggest quarterly loss versus
the euro in four years on Monday, spurred lower by data showing a
sharp gain in euro zone prices that suggested a continued
divergence in monetary policy between the Fed and the European
Central Bank.
The Japanese currency fell only slightly versus the dollar
after the Bank of Japan's quarterly tankan survey on Tuesday
showed business sentiment worsened more than expected in the past
three months. []
After briefly rising above 100 yen, the dollar edged down 0.1
percent to 99.70 yen <JPY=>, trimming earlier gains on investor
wariness before testimony from the Federal Reserve chief and a
slew of U.S. economic data later this week.
Traders said they expected the dollar to trade in a narrow
range in the near term between around 98.80 yen and 100.20 yen,
with few flows expected from Japanese companies and investors at
the start of the new fiscal year in Japan.
The Australian dollar fell against the dollar and the yen
after the country's central bank kept interest rates at a 12-year
high of 7.25 percent, as widely expected, and issued a statement
that cut expectations of a further rate rise. []
The Aussie was down 0.35 percent at $0.9095 <AUD=D4> and fell
0.5 percent to 90.65 yen <AUDJPY=R>
DOLLAR STILL WEAK
Traders said the weak dollar trend remained intact as the
prospect of more interest rate cuts by the Fed to fend off
economic growth deterioration dented the dollar's yield appeal
against other currencies.
Traders were looking to upcoming data for more clues on the
health of the U.S. economy.
Later this session, the Institute for Supply Management will
report on U.S. manufacturing conditions, with a median forecast
of a reading of 47.5, down from 48.3 in February.
For the key monthly jobs data due on Friday, U.S. employers
likely cut payrolls in March for a third straight month.
"With buying related to the fiscal year-end or quarter-end
position closing out of the way, it's hard to imagine players
taking big bets before the jobs data," said Hiroshi Yoshida, a
forex trader at Shinkin Central Bank.
"The dollar remains exposed to selling pressures."
Financial markets have regained some stability following
aggressive steps by the Fed to calm credit market turmoil and
prevent the U.S. economy from deteriorating sharply. It also
found some solace after JPMorgan Chase <JPM.N> agreed to acquire
ailing U.S. investment bank Bear Stearns <BSC.N>.
U.S. Treasury Secretary Henry Paulson announced on Monday
sweeping changes to how financial services for banks, securities,
futures and insurance are regulated in the United States.
[]
Traders remained wary, however, of more reports of losses
from financial institutions and bad economic data.
Fed Chairman Ben Bernanke will testify on Wednesday on the
economic outlook, followed by testimony on Thursday on the role
the regulators played in JPMorgan's bid to acquire Bear Stearns.
The Fed has slashed interest rates by a total of 3 percentage
points since September to 2.25 percent.
(Additional reporting by Chikako Mogi)
