The dollar weakened against most of its peers today even though data on producer prices released out of the US was better than forecast. Core producer prices rose by 0.4% in October above forecasts for a 0.2% increase. The market geared its focus towards the release of meeting minutes from the Federal Reserve set for tomorrow.
The euro strengthened against the dollar as the euro was supported by data released by the ZEW Center for Economic Research which showed that its German economic sentiment index jumped to +11.5 in November from -3.6 in October. The report indicated that the economy is beginning to balance out but cautioned that current geopolitical tensions are still of concern. The market predicts additional stimulus measures to be introduced by the European Central Bank.
The pound strengthened against the dollar after being supported by figures which revealed that the UK?s annual rate of inflation moved up to 1.3% in October from 1.2% in September which was its lowest level in 5 years. The Bank of England expects it to take 3 years to reach its 2% target for inflation. The pound?s advances were curtailed as the dollar was supported by an increase in safe haven demand resulting from Japan falling back into a recession. The pound was weaker against the euro.
The yen weakened against the dollar with the pair trading at 7 year highs following an announcement from Japanese Prime Minister Abe calling for elections in December and for a scheduled sales tax increase to be pushed back. The announcement was made a day after official data had revealed that Japan?s economy has slipped back into a recession for the last quarter. The yen dropped to its lowest level against the euro in 6 years.
The Canadian, Australian and New Zealand dollars strengthened against the dollar. The Aussie dollar was supported by meeting minutes released by the Reserve Bank of Australia which revealed that its key interest rate will most probably remain unchanged for an extended period of time.
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