The dollar fell against the yen and the euro as reports showed
U.S. industrial production dropped in April more than twice as much as
forecast and New York manufacturing unexpectedly contracted this month.
The currency has traded in a range of $1.53 to $1.56 per euro this
month as Federal Reserve policy makers cited the risk of inflation
while the U.S. economy showed signs of weakness. Canada's dollar rose
to near the strongest level versus the greenback since March as crude
oil prices surged.
Consumer prices rose 3.9 percent in April from a year earlier, compared
with an average rate of 2.7 percent over the past decade, a Commerce
Department report showed yesterday. Cleveland Fed President Sandra
Pianalto said on May 13 that prices are rising ``somewhat faster than I
would prefer.''
The dollar weakened versus the yen and the euro as the Fed
reported a 0.7 percent decrease in production at U.S. factories, mines
and utilities last month, following a revised 0.2 percent gain in
March. The New York Fed's general economic index, a gauge of
manufacturing, declined to minus 3.2 in May, from 0.6 the prior month.
Readings below zero signal contraction.
The U.S. currency pared its loss against the euro as the Philadelphia
Fed reported its index of manufacturing registered at minus 15.6 in
May, compared with minus 19 forecast by economists. A negative number
indicates contraction.
The euro strengthened earlier as a report showed Europe's
economy grew more than forecast in the first quarter, increasing the
likelihood the European Central Bank will hold interest rates at a
six-year high.
EUR/USD rose from $1.5487 to $1.5547 in the wake of strong
releases from Germany. Later rate retreated to $1.5490 and, triggering
some stops, it reached $1.5417.
GBP/USD strengthened from $1.9465 to $1.9501 before sliding to $1.9450 and later – to $1.9400.
USD/JPY fell from Y104.91 to Y104.50/40 amid dollar’s weakness. Later rate could rise above Y105.00.
At 09:00 GMT EU trade balance is due to come. Meanwhile, today’s focus
will be on US data, including housing starts and preliminary U Mich
consumer confidence index. Analysts expect index rose to 64.0 from
62.6.