The Euro weakened Wednesday after a top European central banker discussed the possibility of cutting the European Central Bank`s benchmark interest rate to support the sluggish economy. ECB Governing Council member and Bundesbank President Jens Weidmann said Wednesday the ECB could lower interest rates if economic and inflation data suggest it is needed. The Euro extended early morning selloff that sprung after data showed construction activity in the Eurozone fell for the fourth straight month in February, and as ECB Executive Board Lorenzo Bini Smaghi said he is worried from the recent rise in the euro as it may weigh on growth prospects in the region. The Euro fell from a seven-week high today, after tapping the $1.32 level yesterday, and now trades at $1.30328, from an opening at $1.31744. The pair (EUR/USD) earlier hit a high of 1.31985, and a low of $1.30014. The dollar and yen rallied across the board as market volatility increased investor appetite for traditional safe havens, including the greenback and the Japanese currency. The dollar gained despite a suggestion from Federal Reserve Bank of St. Louis President James Bullard that the Fed`s bond-buying program may need to be expanded if inflation continues to fall. The cable fell to its lowest in six weeks against the USD after data showed UK unemployment rate increased and that wage increases slowed, which adds to the view the UK economy is weakening. The Pound slipped against most of its 16 major counterparts after the data, where also, the minutes of the Bank of England’s April meeting showed Governor Mervyn King pushed to increase the stimulus for the third month. The GBP/USD dropped to 1.52441, from an opening at 1.53604, after having hit a low of 1.52166, and a high of 1.53688. The CAD weakened to the lowest level in a month versus the U.S. dollar after the Bank of Canada reduced its growth forecast for 2013 and said economic slack will remain further for more than two years. The USD/CAD advanced to 1.027, from an opening at 1.02059, having earlier reached a low of 1.02058, and a high of 1.02924.
EasyForexNews Research Team