The dollar remained higher against the euro on Wednesday as safe haven demand was underpinned ahead of Thursday’s European Central Bank meeting, while the yen remained close to two-and-a-half year lows against the dollar. Bank of Japan Governor Masaaki Shirakawa said Tuesday that he was stepping down three weeks before the conclusion of his five year term on April 8, along with his two deputy governors. The move is likely to push forward a transition towards more aggressive monetary easing, amid ongoing pressure from Prime Minister Shinzo Abe on the central bank to step up measures to combat deflation. USD/JPY dipping 0.08% to 93.58. Investors remained cautious ahead of the outcome of Thursday’s ECB meeting amid wariness that President Mario Draghi could express concerns over the impact of the euro’s recent gains on the region’s economic recovery. The ECB was not expected to announce any changes to existing monetary policy following Thursday’s meeting. The euro found some support after a German government spokesman said the single currency was not overvalued and that exchange rate policy is not an effective way to increase competitiveness. The comments came after French President Francois Hollande called for a targeted exchange rate on Tuesday. The USD was higher against the euro, with EUR/USD down 0.31% to 1.3539. The pound remained under pressure as a combination of concerns over the faltering economy and the risk of the U.K. losing its triple-A sovereign rating undermined investor confidence in sterling. The greenback was trading near five-month highs against the pound, with GBP/USD dipping 0.07% to 1.5647. Elsewhere, the greenback edged higher against the Swiss franc, with USD/CHF easing up 0.14% to 0.9096. The greenback was broadly higher against its Canadian, Australian and New Zealand counterparts, with USD/CAD inching up 0.09% to 0.9964, AUD/USD falling 0.73% to 1.0313 and NZD/USD down 0.34% to 0.8421. The Canadian dollar found support after data showed that the Ivey purchasing manager’s index rose to a four month high of 58.9 in January, from 52.8 the previous month, outstripping expectations for a reading of 54.0. The Australian dollar remained weaker after official data showed that Australian retail sales fell 0.2% in December, compared to expectations for a 0.3% increase. The weak data added to the view that the Reserve Bank of Australia may cut interest rates further in the coming months. The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.21% to 79.75.
EasyForexNews Research Team