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Euro steadies after rallying on strong German data
[TOKYO] The euro remained close to 2-1/2 week highs in early Asian trading on Wednesday, getting a boost from upbeat German economic data as investors awaited US consumer inflation data later in the global session.
The common currency edged down slightly to US$1.1791 after jumping more than 1 per cent in the previous session. It moved well away from a 3-1/2-month low of US$1.1553 plumbed last week.
The euro's ascent pushed down the dollar index, which tracks the US currency against a basket of six major rivals. It was steady on the day at 93.856, wallowing at its lowest levels since late October and well below its overnight high of 94.542.
Germany's seasonally adjusted gross domestic product rose by 0.8 per cent on the quarter, beating a Reuters poll forecast of 0.6 per cent.
Investors awaited US consumer inflation data for October later on Wednesday, which is expected to show a marginal increase in consumer prices.
"If it is weaker, then that may push down the probability of a Fed rate hike in December," said Jeff Kravetz, regional investment strategist at US Bank Wealth Management.
"Right now, Fed fund futures are pricing in around 80 per cent, but it could go down to like 50-50," he said. "And if we do get a weak number, then I would think the euro would continue to strengthen, versus the dollar."
Data on Tuesday showed US producer prices rose a more-than-expected 0.4 per cent last month, boosting the PPI 2.8 per cent in the 12 months through October for the biggest annual increase in wholesale inflation in more than 5-1/2 years.
But economists said the strong producer price readings probably did not translate into higher consumer prices in October because the correlation between the PPI and consumer price index has weakened.
Against the yen, the greenback inched slightly lower to 113.43, remaining well below its eight-month high of 114.735 hit last week.
Data released earlier on Wednesday showed Japan's economy posted its longest period of uninterrupted growth in more than a decade, expanding at a 1.4 per cent annualised rate in the July-September quarter. That was slightly above the median estimate for annualised growth of 1.3 per cent.