The dollar has extended its gains versus both the Euro and the pound sterling Wednesday. The currency rallied higher yesterday afternoon after the U.S. Federal Reserve signaled that fewer of its voting members are convinced of the need for more economic stimulus.
The minutes of the Fed's March meeting indicated that only two of the 10 members saw the case for another round of quantitative easing amid signs of improvement in the U.S. economy. The minutes of the January meeting had shown that "a few members" believed conditions could warrant additional securities purchases.
The European Central Bank kept eurozone interest rates unchanged at a record low for the fourth month in a row on Wednesday as the region's economy is likely to have entered a recession in the first quarter amid lingering concerns over the sovereign debt crisis.
While speaking at his regular post-decision press conference in Frankfurt, European Central Bank President Mario Draghi said any talk of an exit strategy regarding monetary policy in the euro area is "premature" despite upside risks to inflation.
The dollar has added to Tuesday's late gains against the Euro on Wednesday and has risen to nearly a 3-week high of $1.3106. The U.S. currency had previously been stuck in a range for over a week, around $1.3325.
Eurozone retail sales declined again in February after a moderate improvement in January as record unemployment, high inflation and severe austerity measures forced consumers to cut back spending. Retail sales fell 0.1 percent month-on-month in February, following a 1.1 percent rise in January. Sales have now fallen in five of the past six months. Nonetheless, the rate of decline was marginally better than the expected 0.2 percent drop.
Eurozone private sector contracted less than previously estimated in March, a revised report from Markit Economics showed Wednesday. The Composite Output Index, that measures activity in both manufacturing and services, fell to a three-month low of 49.1 in March, but the reading came in above the flash reading of 48.7. The score was 49.3 in February.
The greenback has also extended its gains versus the pound sterling on Wednesday reaching a high of $1.5832. The dollar rebounded from a 4 1/2 month low of $1.6062 2 days ago.
Activity in the British service sector increased at a faster pace in March, contrary to economists' forecast for a slowdown, data from a survey by Markit Economics and the Chartered Institute of Purchasing and Supply (CIPS) showed Wednesday. The seasonally adjusted purchasing managers' index (PMI) for the service sector rose to 55.3 in March from 53.8 in February. Economists expected the index to drop to 53.4.
The buck is slightly lower against the Japanese Yen on Wednesday, down to around Y82.60, from yesterday's high near Y83.
Japan's private sector expanded at the fastest pace on record in March, a survey by Markit Economics showed Wednesday. The composite output index, that measures performance of both manufacturing and service sectors, rose to a series-record high of 53.2 in March from 51.2 in February.
Employment in the U.S. private sector saw continued growth in the month of March, according to a report released by payroll processor Automatic Data Processing, Inc. (ADP) on Wednesday, with the job growth coming roughly in line with economist estimates. ADP said employment increased by 209,000 jobs in March following an upwardly revised increase of 230,000 jobs in February. Economists had expected an increase of about 208,000 jobs compared to the addition of 216,000 jobs originally reported for the previous month.
While activity in the U.S. service sector continued to expand in the month of March, the Institute for Supply Management released a report on Wednesday showing that the pace of growth in the sector slowed by more than economists had anticipated. The ISM said its non-manufacturing index fell to 56.0 in March from 57.3 in February, although a reading above 50 indicates continued growth in the service sector. Economists had been expecting the index to edge down to a reading of 57.0.
by RTT Staff Writer
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