Posted on March 13, 2015 by the XM Investment Research Desk at 2:57 pm GMT
There were no major market-moving economic data today, keeping most currency pairs steady until the US session, when the dollar gained strength against the euro and the pound despite disappointing US data.
Wholesale prices in the US unexpectedly declined in February for a fourth consecutive month, with a 0.5% decrease in the producer price index. Analysts expected a gain of 0.3%. Last month’s drop followed a 0.8% decrease in January.
Meanwhile, the University of Michigan’s preliminary reading of the consumer sentiment index declined in March to a four-month low of 91.2 from 95.4 in February. There were projections for a reading of 95.5.
The dollar fell versus the yen after the two data releases, down to 121.26 after earlier reaching a high of 121.55. The dollar however remained firm against the euro and the pound. The main driver of the greenback will be next week’s Federal Reserve policy meeting and rate decision.
The euro was back under the 1.0600 level to 1.0502. The currency remains vulnerable to downside. Although fundamental news was light today, most of the focus was still on how the ECB quantitative easing program is impacting European yields and on the concerns of whether there is enough supply for the ECB’s bond buying program.
Sterling fell to fresh multi-year lows on broad dollar strength and weak UK construction output data. Also the lingering uncertainty of the May elections in the UK are weighing on the British currency which touched a low of 1.4708, the weakest level since June 2010. The pound began falling sharply since Thursday after Bank of England Governor Mark Carney’s comments that he was in no rush to raise interest rates from their historic lows.