- POSTED: 15 May 2014 05:53
The euro rose against the dollar on Wednesday after lacklustre data in the eurozone added to speculation the European Central Bank will loosen monetary policy next month.
NEW YORK: The euro rose against the dollar on Wednesday after lacklustre data in the eurozone added to speculation the European Central Bank will loosen monetary policy next month.
The eurozone's industrial output declined in March, while German and French reports on price changes continued to highlight low inflation.
"Eurozone data today confirmed the picture of very subdued inflation which make it increasingly likely that the European Central Bank will ease its monetary policy stance in June," said Rebecca O'Keeffe at Interactive Investor.
The dollar was under pressure from falling Treasury yields after US producer prices rose an unexpectedly strong 0.6 per cent in April.
"Despite a surprise increase in producer prices, 10-year yields hit its lowest level in seven months and as long as US rates are falling, the dollar will have a tough time rallying," said Kathy Lien of BK Asset Management.
The pound, meanwhile, lost ground after the Bank of England raised its 2015 growth forecast to 2.9 per cent, adding that the economy was heading "back to normal" as the recovery picks up speed.
But most analysts do not see the BoE beginning to raise interest rates from their record low level until the beginning of next year.
"The backdrop of weaker expected inflation allows the BoE to keep interest rates lower for longer, and as a result the British pound is under pressure across the board," said Christopher Vecchio, currency analyst at DailyFX.