Investing.com - The dollar traded largely lower against most
major currencies in subdued trading on Wednesday as bargain hunters
sent the euro rising on sentiments a European Central Bank decision
to trim interest rates in June has been priced into trading.
In U.S. trading on Wednesday, EUR/USD was up 0.06% at
Markets are prepared for the European Central Bank to loosen
policy next month.
Reuters reported earlier that the ECB is preparing a "package of
measures" including cuts to all interest rates, with negative rates
on bank deposits to encourage lending to small and medium-sized
businesses to spur recovery.
A day earlier, the Wall Street Journal reported the German
central bank Bundesbank would back ECB monetary easing measures,
including a negative rate on bank deposits and purchases of
packaged bank loans, if such tools were needed to keep persistently
low levels of inflation from becoming entrenched in the euro
Last week, ECB President Mario Draghi said monetary authorities
were "comfortable" with acting at its next meeting in June.
By afternoon trading on Wednesday, the euro rebounded on demand
from bottom fishers, as easing measures aren't a surprise after
months of soft inflation rates and other euro zone data.
Elsewhere, industrial production in the euro zone fell in line
with expectations in March, though the soft numbers underlined
concerns over the outlook for economic growth in the single
currency bloc, official data showed on Wednesday.
In a report, Eurostat, the European statistics agency, said
industrial production declined by 0.3% in March, in line with
forecasts. Industrial production in February rose 0.2%.
Year-on-year, industrial production fell 0.1% in March,
disappointing expectations for a 1.0% gain and after rising at a
rate of 1.7% in the preceding month.
Meanwhile in the U.S., producer price inflation rose more than
expected in April, while core wholesale prices also topped
forecasts, official data showed on Wednesday.
The Commerce Department reported earlier that producer prices
increased by 0.6% last month, beating forecasts for a 0.2% gain,
after rising 0.5% in March.
Year-over-year, the producer price index rose 2.1% in April,
beating expectations for a 1.7% increase and up from 1.4% in the
The core producer price index advanced 0.5% last month, compared
to expectations for a 0.2% increase, after rising 0.6% in
Core produces prices rose at an annualized rate of 1.9% in
April, beating forecasts for a 1.4% gain and after climbing 1.4% in
the preceding month.
The Federal Reserve views core prices as a better gauge of
longer-term inflationary pressure because they exclude the volatile
food and energy categories.
The dollar was down against the yen, with USD/JPY down 0.45% at
101.81 and down against the Swiss franc, with USD/CHF down 0.03% at
The greenback was up against the pound, with GBP/USD down 0.34%
In the U.K. earlier, the Bank of England left its growth and
inflation forecasts largely unchanged and played down speculation
over the timing of a possible rate hike.
The bank said in its quarterly inflation report that it now
expects economic growth of 2.9% in 2015, up from 2.7% in its
February report, and said the rate of growth this year would remain
unchanged at 3.4%.
The bank said it expects annual inflation to be close to its 2%
target over the next two to three years if interest rates in the
U.K. rise in line with expectations in financial markets.
In addition, official data showed that the U.K. unemployment
rate ticked down to a more than five-year low of 6.8% in the three
months to March from 6.9% in the three months to February, in line
The claimant count fell by 25,100 last month, the ONS said,
compared to expectations for a decline of 30,000 people. March's
figure was revised to a drop of 30,600 people from a previously
reported decline of 30,400.
The report said that average weekly earnings rose by 1.7% on a
year-over-year basis in the three months to March, but excluding
bonuses average earnings only rose by 1.3% during the quarter, and
just 1.0% in March.
The dollar was down against its cousins in Canada, Australia and
New Zealand, with USD/CAD down 0.25% at 1.0878, AUD/USD up 0.21% at
0.9378 and NZD/USD up 0.42% at 0.8664.
The US Dollar Index, which tracks the performance of the
greenback versus a basket of six other major currencies, was down
0.07% at 80.13.
On Thursday, the U.S. is to release data on initial jobless
claims, consumer inflation and industrial production, as well as a
report on manufacturing activity in the Philadelphia region.
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