The euro rose for the first time in three days against the dollar after
Europe's economy grew more than forecast, reducing the chances that the
European Central Bank will lower interest rates.
The single currency also traded near a one-week high versus the yen
after data showed German's economy expanded at the fastest rate in 12
years in the first quarter. The New Zealand dollar dropped for a
seventh day on speculation the nation's central bank will reduce
borrowing costs this year after retail sales slumped.
The kiwi, as New Zealand's currency is known, fell to as low as 75.63
U.S. cents, the weakest since Jan. 23, after retail sales in March
contracted 1.2 percent, three times more than economists estimated.
The ECB has avoided interest-rate cuts since last year, keeping its
main refinancing rate at a more-than six-year high of 4 percent, to
curb inflation. Data today showed European consumer prices rose 3.3
percent in April from a year earlier, slowing from 3.6 percent the
previous month.
The U.S. dollar fell against the yen before reports that may show
industrial production shrank, eroding expectations for the Federal
Reserve to raise interest rates.
Futures on the Chicago Board of Trade show 94 percent odds that the Fed
will hold its target lending rate at 2 percent at its next meeting on
June 25. The balance of bets was for a reduction of a
quarter-percentage point. There was a 28.6 percent chance of an
increase to 2.25 percent in September.
The yen may decline to 107 per dollar by early June should it fall
through 105.70, based on charts that traders use to predict price
movements, said Eiji Kinouchi, chief technical analyst at Daiwa
Institute of Research, a unit of Japan's second-largest brokerage.
The dollar will strengthen against most of the major currencies in the
next six months as the Fed stops reducing interest rates, a survey of
Bloomberg users showed.