The U.S. Dollar continued to retreat against a basket of currencies early Wednesday with most of the selling pressure being exerted by the Euro. Individually, the dollar is trading weaker against the safe haven Japanese Yen, but higher versus the export-driven Australian Dollar and New Zealand Dollar.
At 0600 GMT, June U.S. Dollar Index futures are trading 89.245, down 0.035 or -0.04%.
The EUR/USD continues to be supported by upbeat comments from European Central Bank President Mario Draghi earlier in the week. He said that the Euro Zone economy had not been effected by the weakness in the stock market.
The Euro posted a two-sided move against the U.S. Dollar on Tuesday before heading to its strongest level since March 28 earlier today.
The single currency was boosted by a comment from ECB policymaker Ewald Nowotny who told Reuters in an interview that its 2.55-trillion Euro ($3.15 trillion) bond buying programme would be wound down by the end of the year, which would pave the way for the bank’s first rate hike since a failed attempt in 2011.
The Euro had an intraday sell-off after an ECB spokesperson said Nowotny’s comments about the future direction of ECB rates do not represent views of the bank’s rate setting Governing Council.
China Economic Data
Earlier in today’s session, China reported a drop in producer price inflation, which slowed to a 17-month low. The news pointed towards slower economic growth this year. Consumer inflation was also under pressure due to a drop in consumer demand.
Officially, the producer price index (PPI) rose 3.1 percent in March from a year earlier, compared with 3.7 percent in February, the National Bureau of Statistics (NBS) said. Analysts polled by Reuters had expected March producer inflation to come in at about 3.2 percent.
The consumer price index (CPI) rose 2.1 percent from a year earlier, below expectations of 2.6 percent and slowing from February’s gain of 2.9 percent.
On a month-on-month basis, the CPI declined 1.1 percent. The core consumer price index, which strips out volatile food and energy prices, rose 2.0 percent in March, down from 2.5 percent in February.
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Gold
Gold futures remained supported early Wednesday by jitters over a possible trade war. Lower equity prices and a weaker U.S. Dollar also underpinned the safe-haven asset. Investors were also positioning themselves ahead of Wednesday’s report on U.S. consumer inflation and minutes from the Federal Reserve’s March meeting.
On Tuesday, gold traders responded to a report which showed U.S. producer prices increased more than expected in March. This report suggests a steady buildup of inflation pressures.
Crude Oil
U.S. West Texas Intermediate and international-benchmark Brent crude oil futures remained at elevated levels on Wednesday amid growing tensions surrounding possible air strikes on Syria. This news offset a reported build in crude oil inventory by the American Petroleum Institute.