The dollar rose against the euro and the yen as U.S. productivity
unexpectedly accelerated in March while Europe showed signs of an
economic slowdown.
The pound fell to a 2 1/2-month low
against the dollar after an industry report said U.K. consumer
confidence declined last month to the weakest in at least four years.
The
U.S. currency strengthened as the Labor Department reported that
productivity unexpectedly accelerated in the first quarter, indicating
the world's largest economy can expand with lower inflation. The U.S. currency will rise to $1.47
against the euro in three months because the Fed may not lower interest
rates any further, according to UBS AG, the world's second-biggest
currency trader.
U.S. productivity rose at a 2.2 percent
annual rate in the first quarter after a 1.8 percent gain in the prior
quarter, the Labor Department said today in Washington. The median
forecast of 69 economists surveyed by Bloomberg News was for the
measure of worker efficiency to advance at a 1.5 percent annual pace.
The
British pound dropped more than 1 percent versus the Canadian dollar
and the South African rand after Nationwide Building Society said an
index of sentiment in the U.K. declined to the lowest level since data
began in May 2004.
EUR/USD
fell from $1.5535 to $1.5360/95.
GBP/USD retreated from $1.9730 to a low at $1.9500, before to be back till $1.9540.
USD/JPY prnted high at Y105.60 before sliding to Y104.60.
Interest rate announcements dominate the calendar in Europe on
Thursday. German March industrial output is due at 1000GMT and is
expected to come in at -0.4% m/m, 4.9% y/y. US data also starts at
1230GMT, when initial US jobless claims are expected to fall 4,000 to
376,000 in the May 3 week, remaining near theelevated level of the
previous week.
At 1100GMT, the Bank of England Monetary Policy Committee interest rate
is due announcement. This will come against the backdrop of the May
Inflation Report. However, the BoE looks unlikely to go for a
back-to-back rate cut in May having already cut in April. The ECB
interest rate decision is due at 1145GMT and is followed at 1230GMT by
the press conference chaired by ECB President Jean-Claude Trichet,
which is taking place in Athens. The ECB is clearly expected to leave
its key Refi rate unchanged at 4.00%, which will leave the focus on the press conference at 1230GMT.US data continues at
1400GMT with wholesale inventories for March, while at 1430GMT,
Treasury Secretary Henry Paulson is due to speak about the US economic
stimulus package, in Kansas City, Missouri.