The dollar fell the
most in almost two months against the euro as the price of oil rose above $129 for the
first time and speculation increased that the European Central Bank will keep
interest rates high.
The euro gained after an adviser to the German
government said European policy makers may raise borrowing costs as soon as the
financial crisis ends.
The Producer Price
Index gained 0.2%
in April, short of economists' expectations and following a rise of 1.1% in the
previous month. But prices excluding food and energy costs rose 0.4%, twice
what was expected.
The euro gained after a government report showed
German producer-price inflation, an early indicator of price pressures in the
economy, accelerated to the fastest pace in almost two years in April on energy
costs.
The single currency
briefly pared gains
after an industry report showed investor confidence in Germany
unexpectedly fell. The ZEW
Center for European Economic
Research said its index of investor and analyst expectations declined to minus
41.4, from minus 40.7 in
April. Economists expected a gain to minus 37, according to a survey.
The Japanese currency
held gains earlier
after the Bank of Japan kept its benchmark interest rate at 0.5%. Governor
Masaaki Shirakawa told a press conference inflation risks are rising globally.
EUR/USD fellto$1.5560
afterweaker-then-expectedZEW index. Later rate rebounded, printed new session high on
$1.5670.
GBP/USD was positive,
rising from $1.9530 to $1.9665 before it set stable around $1.9640/50. Later
rate refreshed session high and printed new one around $1.9713.
USD/JPY was
supported at Y103.70 before it rebounded to Y104.15. But general dollar’s weakness
dragged the rate down to Y103.55.
In Europe the focus will be on Germany’s IFO business climate index. Analysts predict index fell to 102.1 in May from 102.4. UK
will issue MPC minutes at 08:30 GMT.
Later (at 11:00 GMT) Canada inflation data will be
released.
At 18:00 GMT attention
will be on FOMC’s minutes, when Fed lowered rate to 2.0%.