Asian Shares Waver, Euro Wallows Near Lows

NDTV Profit Desk

07 Nov 2014, 07:30 AM IST

Tokyo: Asian shares wobbled in early trading on Friday, while the euro wallowed around two-year lows after European Central Bank President Mario Draghi vowed to take more easing steps to spark growth in the euro zone.

Investors were likely to remain cautious ahead of the key US nonfarm payrolls report later in the session. Solid gains in employment would increase speculation that the US Federal Reserve could raise US interest rates in the middle of next year.

MSCI's broadest index of Asia-Pacific shares outside Japan was down about 0.1 per cent in early trading, while Japan's Nikkei stock average rose 0.6 per cent.

On Thursday, Wall Street rose in a volatile session, with the Dow Jones industrial average and S&P 500 hitting record closing highs, and European shares posting modest gains after Draghi said further stimulus means the ECB's balance sheet would be as large as it was in March 2012, when it grew to 3 trillion euros.

Draghi's remarks came after the ECB kept interest rates at a record low of 0.05 per cent.

"The trade in FX still centers around policy divergence and in Draghi's own words, the 'main message' today is that 'ECB assets will expand as others contract.' As long as there is a risk of additional easing from the ECB, the euro will remain under pressure," said Kathy Lien, managing director at BK Asset Management in New York, in a note to clients.

But with speculators holding the largest amount of euro/dollar short positions since July 2012, the single currency is vulnerable to a short squeeze up to $1.2600, she added, and said she viewed any euro rallies as an opportunity to sell before its eventual move down to $1.2250.

In early Asian trading, the euro edged up to $1.2383 after brushing a more than two-year low of $1.2370.

The dollar bought 115.12 yen, not far from a fresh 7-year peak of 115.52 touched overnight.

US data showed the number of Americans filing new claims for unemployment benefits fell more than expected to 278,000 last week, compared with forecasts of 285,000. Claims have now been below the 300,000 threshold for eight straight weeks, suggesting that employment growth was gaining momentum.

Later on Friday, the nonfarm payrolls are expected to show a rise of 231,000 jobs last month after increasing 248,000 in September, according to a Reuters survey of economists. The jobless rate is seen steady at a six-year low of 5.9 per cent.