TOKYO - The US dollar rose against the euro in Asia on Thursday as traders waited to see US president-elect Barack Obama's economic policies take shape, dealers said.
The euro dropped to US$1.2881 (S$1.90) in Tokyo morning trade, down from US$1.2962 in New York late on Wednesday. The euro fell to 126.55 yen after 127.45. The US dollar eased to 98.23 yen from 98.33.
Traders were watching to see who Mr Obama would pick as his top finance official.
'If the new treasury secretary expresses strong determination to improve the financial situation, it would benefit the dollar', said Mr Saburo Matsumoto, chief forex strategist at Sumitomo Trust Bank.
The names of former treasury secretaries Lawrence Summers and Robert Rubin have surfaced as those Mr Obama is believed to have in mind for the post.
Dealers said that the new president may have to revive the 'strong dollar' mantra to attract much-needed capital from abroad as the government tries to stimulate the economy through government spending.
Mr Obama, who will be inaugurated in January, inherits an economy mired in the worst financial crisis since the 1930s. The Dow Jones share average plummeted nearly 500 points on Wednesday on resurgent fears of a deep recession.
Weak US data 'seemed to provide a reality check on the difficulty of the task confronting president-elect Obama in resuscitating the troubled economy', NAB Capital currency strategist John Kyriakopoulos wrote in a note.
A report by the Institute for Supply Management showed activity in the services sector shrank more sharply than anticipated in October.
A survey showed the US private sector shed 157,000 jobs in October.
Official figures due Friday that are expected to show a rise in the US jobless rate from a five-year high of 6.1 per cent in September.
Investors were anticipating further cuts to interest rates on Thursday by both the Bank of England (BOE) and the European Central Bank amid fears of recessions in Europe's biggest economies.
Some economists are even forecasting the BOE would follow up last month's emergency half-point reduction to 4.50 per cent with a cut of 100 basis points.
Traditionally, lower interest rates make a currency less attractive to investors, but dealers noted that the Australian dollar gained ground earlier this week as investors welcomed a 75-basis-point rate cut there. -- AFP
