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European Shares Dip Ahead Of ECB Meeting

European Shares Dip Ahead Of ECB Meeting

European shares fell on Wednesday as investors waited to see if the European Central Bank would respond to the currency’s recent jump after Germany said it was not overvalued.

United States stock index futures also pointed to a lower open on Wall Street after the benchmark S&P 500’s rally of more than one per cent a day earlier.

Reuters reported on Wednesday, that the ECB is widely forecast to keep rates at a record low 0.75 per cent when it meets on Thursday, but focus will be on whether its policymakers are worried the euro’s strength could undermine any recovery in troubled economies like Spain.

Following complaints about the currency’s level from France, German Chancellor, Ms. Angela Merkel’s spokesman said the currency was not overvalued and that competitiveness could not be achieved via exchange rates.

Against the dollar, the euro was 0.5 per cent lower at $1.3516 by 8.30 a.m. ET but was well within this week’s range of $1.3450 to $1.3710.

Japan’s yen, at the centre of concerns that some countries are trying to devalue their currencies to boost growth, nearly hit a three-year low earlier in the day on the view a new Bank of Japan governor will ease policy aggressively once in office.

“Euro-dollar looks quite comfortable to the low to mid 1.35’s and I think that is where we will stay ahead of tomorrow’s ECB meeting,” said National Australia Bank strategist Gavin Friend.

“When you look at the big fall in the yen, it just interests me whether the ECB see that as a disorderly move. It is raising eyebrows around the world and the euro’s rise is part of that.”

The broadly stronger dollar touched 94.075 yen, its highest since May 2010 before profit taking saw it drop back to 93.55 yen, while the euro also rose as high as 127.71 yen, its strongest since April 2010, before it also eased.

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