The Euro to USD exchange rate fell to a session low on Wednesday after the single currency remained under pressure from the release of a weaker than expected producer price inflation report and as a US jobs report hinted that the US economy is recovering from a winter slowdown.
The euro zone producer price data released earlier in the session showed that inflation fell again in February adding to pressure on the European Central Bank to implement new policy measures in an effort to stave off the risk of deflation in the currency bloc.
Some investors however expect the ECB to leave monetary policy on hold tomorrow, after Bundesbank head Jens Weidmann said over the weekend that the euro zone is not in a deflationary cycle, and that the recent slowdown in inflation was due in large part to temporary factors, such as falls in food and energy prices.
The US Dollar advanced following the publication of the latest ADP employment change data which showed that US employers added 191,000 workers to their staff in March, suggesting that the US economy is recovering from unusually harsh weather conditions seen earlier in the year.
Reducing further gains was a separate ISM report which showed that output in the New York area softened in March. The ISM Index fell to 52 in March, down from the 57 recorded in the previous month.
The US Dollar is likely to make further gains on Thursday if balance of trade, jobless claims and ISM manufacturing data come in positively. Attention will also be focussed on the ECB’s interest rate decision and press conference. Investors will be looking for any hint that the Central Bank could introduce stimulus measures.
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Euro,
,US Dollar,1.3780 ,
Euro,,British Pound,0.8281 ,
Euro,,Australian Dollar,1.4893 ,
Euro,,Canadian Dollar,1.5179 ,
[/table]
