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Euro falls ahead of ECB; dollar gains on data

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The euro retreated against most major currencies Wednesday on expectations of further European Central Bank monetary stimulus, while US economic data was strong enough to lift the dollar.

[NEW YORK] The euro retreated against most major currencies Wednesday on expectations of further European Central Bank monetary stimulus, while US economic data was strong enough to lift the dollar.

Expectations are rising that the ECB will take action next week, with news accounts pointing to a chance of the central bank increasing its debt purchases or surprising the market with unconventional measures.

Kathy Lien, analyst at BK Asset Management, cited talk of a "two-tiered deposit rate" where large depositors would be charged more than small depositors.

While such an outcome may be unlikely, "it is clear from today's price action that while investors have considered more ECB stimulus, they have not considered how aggressive or creative they will be," Ms Lien said.

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In the US, Commerce Department data showed consumer spending rose just 0.1 per cent in October. But other data showed jobless claims edging lower, durable goods orders rising and new-home sales gaining.

"US economic data came in mixed but mostly better this morning, confirming what's been a rather soft environment but one in which the Federal Reserve may ultimately feel comfortable with raising rates in December," said Christopher Vecchio, currency analyst at DailyFX.

AFP

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