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May 29, 2017

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Euro wobbles as interest rates cut to all-time low

TOKYO--The euro was under pressure in Asian trade Tuesday, weighed by a European Central Bank interest rate cut and poor data from the eurozone.

The ECB cut its key rates to an all-time low on Thursday and bank chief Mario Draghi said the institution may launch further easing if the 17-nation bloc's economy does not improve.

The bank lopped off a quarter-point to a record 0.50 percent as part of efforts to boost demand and drag the debt-stricken eurozone out of recession.

The decision and Draghi's comments came after Tokyo financial markets closed for a holiday weekend.

A leading European indicator of business activity, the Markit purchasing managers index, showed continued contraction in the eurozone in April, with powerhouse Germany registering its first decline since November.

The dollar meanwhile benefited from a surprisingly strong U.S. jobs report for April on Friday, boosting hopes for the world's largest economy which has seen a mixed bag of indicators lately.

The U.S. Labor Department on Friday reported the U.S. economy added 165,000 jobs in April, and revised sharply upwards its numbers for the previous two months, helping to send the unemployment rate down to 7.5 percent.

In afternoon Tokyo trade on Tuesday, the greenback fetched 99.05 yen, weaker than 99.31 in New York Monday but well above the 97-yen range on pre-holiday May 2 trading.

The euro traded at US$1.3079 and 129.56 yen Tuesday morning against US$1.3074 and 129.87 yen in U.S. trading.

In Japan, officials have treaded carefully over the yen's steep decline in recent months, with Finance Minister Taro Aso saying Tuesday that it will take some time to see the real impact of the Bank of Japan's aggressive new easing measures, seen as a key driver of the yen's decline.

"The yen may fall and stocks may rise all of a sudden as a result of that, but trends tend to emerge a few months" afterwards, Aso told a news briefing.

The dollar was mixed against other major Asian currencies.

It rose to 29.65 Thai baht from 29.57 baht on Monday afternoon, to 54.29 Indian rupees from 53.89, and to 40.89 Philippine pesos from 40.84.

The greenback slipped to 1,093.48 South Korean won from 1,093.65 while holding steady at SG$1.2307.

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