Asian shares capped by US stock fall, ECB eyed

On Thursday Asian shares were capped due to an overnight decline in US equities and the wariness before the European Central Bank’s decision on interest rates later in the session.

As was widely expected, the US Federal Reverse maintained its commitment to buy $85 billion in bonds each month, the dollar remained weak, which stayed near lows in comparison to a basket of six major currencies.

On Wednesday .DXY hit its lowest since late February at 81.331.

Early in Asia this session the common currency stayed steady at $1.3178, also the dollar’s weakness helped lift the euro to a two month high of $1.3243.

Even with increasing market expectations for the ECB to cut its main interest rate by 25 basis points to a record low 0.5 percent later on Thursday, the euro has maintained its steady state.

Barclays Capital said in a research note that “Poor growth prospects remain a major deterrent to credit demand in the euro zone.

The lack of credit demand points to further contraction in the region. This poor prognosis along with the disappointing read on Germany‘s PMI in April should see the ECB ease policy.”

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AJP