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economy news
* Draghi says will monitor impact
of euro strength
* Yen on course to log seven
straight weeks of fall
* Pound recovers after incoming
BoE chief drops no easing hint
* Aussie rebounds on China data
after hitting 3-month low
TOKYO, Feb 8 (Reuters) - The euro
hovered near a two-week low on Friday after the European Central Bank chief
voiced concern about the impact of the currency's recent strength on the
economy in remarks that analysts said went further than they had expected.
Mario Draghi said on Thursday
that the exchange rate is important for growth and price stability and that he
wants to see "whether the appreciation is sustained and will alter our
risk assessment as far as price stability is concerned." Analysts said.
The euro traded at $1.3405, close
to its late U.S. levels after having fallen 0.9 percent on Thursday. At one
point it fell as low as $1.33705, the lowest since Jan. 25.
Draghi said economic activity in
the euro area should recover gradually in 2013 but added there are more
negative risks than positive.
"I got the impression that
he went into greater depth than expected...given that last month he just read
out a G20 statement, when he was talking about currencies," said Teppei
Ino, currency analyst at the Bank of Tokyo-Mitsubishi UFJ.
The euro also slipped to a
two-week low against the British pound, which broadly strengthened after
incoming Bank of England governor Mark Carney gave no hints that he favoured immediate
easing monetary policy.
The pound also rose against the
dollar to $1.5718, off a six-month low of $1.5630 hit earlier in the week.
The single currency also slipped
against the yen from a 33-month high of 127.71 yen set on Wednesday to trade at
125.40 yen.
Still, despite the latest
setback, the euro could be supported by the perception that the ECB's policy
easing bias is much weaker than that at the U.S. Federal Reserve and the Bank
of Japan, said Makoto Noji, senior strategist at SMBC Nikko Securities.
"When U.S. and Japanese
central banks are expanding their balance sheet, the ECB is shrinking its
balance sheet. The euro is likely to be firm unless we have a major surprise in
Italian election," he said.
Polls have showed Italy's
centre-left bloc is in the lead to win the Feb. 24-25 election.
But its narrowing lead over the
centre-right led by former prime minister Silvio Berlusconi has unnerved
investors on concerns that his policies, such as tax-cut proposals, could undo
the country's efforts to win back investor confidence.
The yen edged up slightly from
late U.S. levels on profit-taking but is still on course to log seven straight
weeks of losses against the dollar, which would be the longest spell since
1989.
The dollar dipped 0.2 percent to
93.48 yen, as traders took profits after its failure to convincingly break
above a major resistance at 93.96, a 38.2 percent retracement of its 2007-2011
decline. But it's still up 0.8 percent on the week.
The dollar hit a 33-month high of
94.075 earlier in the week as investors sold the yen on expectations that Japan
will pursue aggressive monetary easing to shore up the economy.
The country's deteriorating
balance of payment also weighed on the yen. Data showed Japan posted a current
account deficit for two months in a row in December, the first time the balance
turned red for two straight months in data dating back to 1985.
The Australian dollar dropped to
3-month low of $1.0256 after the Reserve Bank of Australia trimmed its growth
and inflation forecasts, but the currency bounced back after strong Chinese
exports data.
It last stood at $1.0295, up 0.15
percent from late U.S. levels as data showed China's exports grew 25 percent in
January from a year earlier, above expectations of 17 percent growth, adding to
evidence of an economic rebound.
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