Euro extended losses during European trading hours, after a steep fall on Tuesday in reaction to the Fed minutes. Adding to euro weakness was a string of string of disappointing economic data for the euro zone, showing business activity contracted in March the region’s retail sales showed a decline in volume. Also a disappointing Spanish bond auction and rising yields lifted concerns back to the euro zone debt crisis.
The European Central Bank announced it kept the benchmark interest rate unchanged at 1.0 percent as expected. The euro fell further during ECB President Mario Draghi’s press conference and after U.S. data showing private-sector payrolls increased 209,000 in March, led by the service-providing sector and small businesses, according to the ADP employment report.
EURUSD opened in Europe at 1.3196 and fell to a three week low of 1.3109. EURJPY dropped to 107.89 from 108.97.
Sterling outperformed against most counterparts expect for the broadly stronger U.S. dollar. Stronger-than-expected UK services PMI gave the pound a lift, which followed from other strong data earlier this week on manufacturing and construction PMIs. The improved data suggest a pick up in the UK economic recovery and could avert a recession. Against the euro, the pound hit a two-month high but was weaker against the dollar which was boosted following the hawkish Fed minutes from Tuesday. GBPUSD briefly hit a session high of 1.5908 post PMI data, before sliding to 1.5850. EURGBP fell to 0.8268 from an early session high of 0.8312.
USDCHF continues to soar since the Fed policy minute, jumping from 0.9020 late Tuesday, to a two-and-a-half week high of 0.9179 in European trading today, with gains accelerated after the U.S. ADP payrolls report showing more jobs created.
USDCAD opened the session at 0.9916 and rose to 0.9967.
USDJPY reversed direction and dollar lost all gains made after the sharp jump to 82.98 following the Fed minutes on Tuesday. The pair opened Europe at 82.60 and fell to 82.08.