Tuesday, February 27, 2024
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Euro slips on risk of lower inflation data, yen drifts lower

The euro fell against the dollar and pared its gains against the yen on Monday as some fretted that euro zone inflation data for February could be revised down in its final reading, keeping pressure on the European Central Bank to ease policy more.

The safe-haven yen slipped against the dollar as European stocks edged up on expectations the West will impose only limited sanctions on Russia after Ukraine's Crimea region voted in favour of annexation by Moscow.

(Read more: Vote over, now what between West and Russia?)

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Over 95 percent of Crimean voters chose in a referendum to join Russia on Sunday, an outcome that was denounced by Western powers and Kiev as illegal and a sham.

While the risk of flare-ups in tension between Russia and Ukraine is underpinning demand for safe-haven currencies like the yen and the Swiss franc, the market's immediate focus this morning is on final euro zone inflation data due at 1000 GMT.

(Read more: Ukraine foreign minister: We will fight for our land)

A Reuters poll forecast no revision to the annual rate of 0.8 percent reported for February, but there is a risk it could be revised down, keeping alive concerns about disinflation in the euro zone.

"Our economists expect that the strong 0.8 percent which the flash estimate produced will be revised downwards to 0.7 percent," said Ulrich Leuchtmann,currency strategist at Commerzbank, Frankfurt.

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