The euro was rather unmoved against the dollar in the recent bull-run despite the restoration of risk sentiment following encouraging economic data from the U.S. and a relatively positive trigger in resolving Greek debt crisis.
The US weekly jobless claims unexpectedly dropped to nearly a 4-year low in the week ended February 11, housing starts came in well above economist estimates in the month of January and the Philadelphia Federal Reserve showed a continued expansion in regional manufacturing activity in the month of February.
Reports suggesting that European central banks will complete an exchange of Greek government debt for new Greek bonds also boosted risk-sentiment. This offset the negative sentiment that was generated by a warning by Moody's that it may cut the credit ratings of 17 global and 114 European financial institutions.
Although the euro-greenback pair gained ground in Wednesday's New York session on macroeconomic support, it failed to resume its rally above its 20-day SMA in the Asian session. The pair leveled off mostly in Asian trading, moving in a tight range of 1.3150 and 1.3125.
The notable underperformer ahead of the London session was the yen, as its selling intensified after Bank of Japan's monetary policy minutes of its January 24-25 meeting showed that the members of the monetary policy board felt the need to extend its asset-buying programs for some time.
The Bank of Japan surprised the market on Tuesday by expanding its asset-purchase program by JPY 10 trillion or $128 billion, bringing up the total QE to JPY 65 trillion or $829 billion. While keeping its interest rate unchanged at 0-0.1 percent, the central bank also set a temporary inflation target of 1 percent.
The euro rose above the 104.0 level against the yen for the first time since December 9, 2011 and the pair is approaching the 50 percent retracement target at 104.40. The single currency also failed to make any significant headway against the pound and the Swiss franc in the Asian session. While the euro-pound pair moved in ranges, the euro-franc pair attracted a scanty bid.
The German PPI for January, the eurozone current account and construction output data-both for December and the UK retail sales for January are expected to garner market attention in the upcoming European session. The US consumer price index and leading indicators for January are the major releases in the New York session.
For comments and feedback: editorial@rttnews.com