2009.01.1205:30:00UTC+00Euro Falls To 1-Month Low Versus Yen

Monday during early deals, the European single currency fell to a 1-month low against the Japanese yen and a 6-day low against the US dollar on expectation that the European Central Bank would opt for an aggressive interest rate cut later this week to prop up its economy from recession. The euro advanced against its Swiss and UK counterparts during this time period.

The euro is under selling pressure on expectation of an interest rate cut when the European central bank meets on this Thursday. The bank is widely expected to slash the rates by 50 basis points to 2.00%. A collapse in the European manufacturing sector as well as the increased risk of sovereign debt rating downgrades in Europe put pressure on the ECB to cut rates.

In economic news, the German Federal Statistical Office announced today that the turnover in manufacturing declined a working day adjusted 6.4% year-over-year in November, compared with a revised 3.2% fall recorded in October.

The European single currency edged down against its Japanese counterpart during Monday's early trading. At about 3:30 am ET, the euro fell to a 1-month low of 120.12, with downside target level of 117.46. The euro-yen pair closed last week's deals at 121.42.

Against the US currency, the euro dropped to a 6-day low during Monday's early trading. The euro that was worth 1.3447 against the dollar at last week's close touched 120.12 by about 3:30 am ET. If the euro slips further, it may likely target the 1.3003 level against the buck.

Against the British pound and the Swiss franc, the euro climbed during today's early deals. The euro that closed Friday's deals at 0.8861 against the pound and 1.4975 against the franc, rose to 0.8966 and 1.5006 respectively, during today's early deals.

The UK economy contracted 1.5% in the last three months of 2008, which was the fastest pace of decline since 1980, reports said citing the National Institute for Economic and Social Research or NIESR. Gross domestic product declined 0.6% in the prior quarter. Since 1955, when quarterly figures were first produced, there have been only five quarters in which output has fallen more, the think tank said.

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