In early European deals on Wednesday, the euro plummeted to a fresh 5-week low against the dollar as a fall in most Asian and European stock prices increased risk aversion. The euro also declined against the yen, but it recovered from multi-day lows against the pound and the franc.
European stocks fell in early trade today as investors digested a mixed set of company earnings and pharmaceuticals group Roche tumbled after disappointing results on a cancer drug trial.
At 3:14 am ET, the FTSEurofirst 300 .FTEU3 index of top European shares was down 0.7 percent at 782.29 points.
Uncertainty about the European Central Bank's next monetary policy move has also kept selling pressure on the euro against the dollar and the yen.
The ECB is expected to cut interest rates from 1.25 percent to 1.0 percent in May but it is unclear whether it will follow the Federal Reserve and other central banks and create money through other means, such as buying corporate or sovereign debt.
The International Monetary Fund warned yesterday that losses from banks during the current global recession could reach $4.1 trillion. That staggering number was the highlight of the IMF's global financial stability report, which added a half a trillion dollars to its previous estimate for the amount financial institutions, would have to write down.
The euro, which closed yesterday's trading at 1.2953 against the dollar, fell to 1.2888 during early deals on Wednesday. This set the lowest point for the euro since March 16. If the euro-dollar pair weakens further, it may likely target the 1.28 level.
U.S. Treasury Secretary Timothy Geithner said yesterday that most U.S. banks have enough reserves to keep lending, but investors were reluctant to dive back into risk, such as by pushing commodity-related currencies higher, until further clarity could be reached on the banking industry.
In early deals on Wednesday, the euro slipped against the yen. At about 3:10 am ET, the euro-yen pair touched 126.43, down from yesterday's close of 127.87. The next downside target level for the pair is seen at 126.12.
The yen jumped today as Japan's trade surplus increased more than expected in March.
Japan saw a merchandise trade surplus of 11 billion yen in March, the Ministry of Finance said today - beating analyst expectations for a 10 billion yen surplus following the revised 82.1 billion yen surplus in February.
Imports were down 36.7 percent on year versus expectations for a 37.3 percent fall after the 43 percent contraction in the previous month. Exports dropped 45.6 percent on year versus the 46.6 percent decline that had been forecast following the 49.4 percent decline a month earlier.
The euro dropped to a 6-day low of 1.5096 against the franc before bouncing back at 12:15 am ET Wednesday. As of now, the euro-franc pair is trading near yesterday's close of 1.5123 with 1.516 seen as the next target level.
The euro advanced against the pound after hitting a 2-day low of 0.8813 at 8:55 pm ET Tuesday. The euro-pound pair that closed yesterday's New York session at 0.8828 is presently quoted at 0.8873. The near term resistance level for the pair is seen at 0.892.
Traders are now likely to focus on the Bank of England minutes and the UK labor market statistics, which are due at 4.30am ET.
At the end of two-day rate setting meeting, the Monetary Policy Committee of the BoE held the interest rate at historical low of 0.5%.
A preliminary M4 money supply report is expected at the same time. After rising 1.4% in February, M4 money supply is expected to increase 1.2% on a monthly basis in March.
At 7:30 am ET, UK's Chancellor of Exchequer Alistair Darling is set to announce his second budget statement.
According to the findings of the Operational Efficiency Programme released by the HM Treasury on Tuesday, there is a scope for GBP 15 billion of efficiency savings. In its pre-budget report, the government had increased the target for the current spending review period to GBP 35 billion savings.
Economists expect government borrowings in the range of GBP 150 billion to GBP 175 billion. This would lift borrowings to 12% of GDP for each of the coming two years.
Darling is also expected to downwardly revise the GDP forecast for the British economy.
Turning to the U.S., the Energy Information Administration is scheduled to release its weekly petroleum inventory report at 10:30 am ET.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.