Asian markets were mixed but the euro rose Tuesday as attention turns to a European Central Bank policy meeting later in the week, with dealers hoping for plans to restart a bond-buying programme.
With US markets closed for the Labor Day holiday on Monday and few catalysts, regional investors took a wait-and-see approach with the ECB meeting on Thursday as well as closely watched US jobs figures due on Friday.
Tokyo, Hong Kong and Shanghai were flat, while Sydney eased 0.30 percent, and Hong Kong and Seoul was 0.10 percent higher.
Expectations rose that the ECB would announce a new round of sovereign bond purchases after European lawmakers said the bank’s head, Mario Monti, had indicated such a move.
With struggling economies such as Spain, Italy and Portugal desperate for help to push down their borrowing costs Monti said any central bank intervention would include only short and medium-term debt, the lawmakers said.
He said in a closed-door meeting that bond-buying in the past was justified to help stabilise and protect the 17-nation eurozone, they added.
“The only question is whether or not it (the ECB) will print more money between now and November,” Nicholas Smith, equity strategist at CLSA in Tokyo, told Dow Jones Newswires.
Draghi’s comment helped push the euro to a two-month high of $1.2618 Tuesday in Asia, compared with $1.2598 late Monday in London trade. It also fetched 98.93 yen, compared with 98.68 yen. The dollar was at 78.40 yen against 78.32 yen.
Investors brushed off data that showed eurozone manufacturing activity contracted for a seventh straight month in August.
A purchasing managers index survey of thousands of eurozone manufacturers compiled by research firm Markit came in at 45.1 in August. While it is up from 44.0 in July it still shows the sector is deep in contraction.
Any score below 50 indicates shrinkage.
Asian markets mostly rose on Monday on hopes for fresh stimulus measures after figures showed manufacturing in giants China and India continued to weaken.
Also in traders’ sights was the release of jobs figures out of the United States as they look for clues on the state of the world’s biggest economy with its recovery stuttering.
Another weak result would stoke expectations for another round of bond-purchasing by the Federal Reserve, or quantitative easing.
Oil prices rose, with New York’s main contract, light sweet crude for delivery in October, advancing 78 cents to $97.25 a barrel and Brent North Sea crude for October up 37 cents at $116.15. Gold was at $1,696.80 at 0245 GMT compared with $1,688.65 on Monday.
