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Euro shaky after ECB's cautious stance

Friday, August 08 08:43:05

The euro was on the backfoot early on Friday after European Central Bank President Mario Draghi struck a cautious note on the euro zone economy, while lower debt yields pressured the dollar against the yen.

The European Central Bank's decision on Thursday to leave interest rates unchanged on Thursday was not unexpected, but Draghi said the Ukraine crisis threatened the economy and weakened the euro.

The euro traded little changed at $1.3360 after shedding about 0.15 percent overnight. The common currency, which hit a nine-month low of $1.3333 on Wednesday, stands to lose about 0.5 percent on the week.

The dollar eased to 102.05 yen after the benchmark 10-year U.S. Treasury yield declined sharply overnight on concerns over the escalating conflict in Ukraine, and a Russian ban on Western food imports.

The greenback had risen as high as 102.46 on Thursday on news that Japan's public pension fund plans to increase asset allocations to the domestic stock market.

Traders are also watching out for the outcome of the Bank of Japan's monetary policy meeting later in the day for any cues.

While the BOJ is expected to stand pat on policy, a weaker assessment of the economy by policymakers could stoke expectations of further monetary easing and dent the yen.

The Australian dollar, which tumbled on Thursday after data showed a surprising jump in the domestic unemployment rate, is likely to look to Chinese trade data due at 0200 GMT for some relief.

A strong rise in exports from the world's second-biggest economy - Australia's major export market - should support the Aussie.

The market will also pay attention to the Reserve Bank of Australia's quarterly statement on monetary policy at 0130 GMT for the central bank's views on inflation and growth views.

The Australian dollar was almost flat at $0.9267 after sliding nearly 0.9 percent on Thursday, when it hit a two-month low of $0.9259. (Reuters)

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