Euro gave up earlier gains to turn negative against the dollar after a combination of factors. Euro gained in Asian trading on news that China will still continue investing in the euro zone. But a series of economic data from Europe soon dampened risk appetite. The euro-zone economy as a whole contracted by 0.3 percent in the fourth quarter of 2011, though beating expectations for a 0.4 percent fall. Europe’s largest economy, Germany, also showed a contraction of 0.2 percent, down from a previous growth of 0.6 percent.
Further pressuring euro is more uncertainty regarding Greece and when and if it will receive the second bailout package. Some EU sources said that the rescue package could be delayed until after the Greek general elections in April.
EURUSD fell to a session low of 1.3065. The pair had reached as high as 1.3189 early in European trading in reaction to the news of China’s support in the euro zone. The euro fell against the yen from its highest level since December 12,at 103.47, to touch a low of 102.47 yen .
Sterling experienced a choppy session due to a string of domestic news. GBPUSD see-sawed from highs of 1.5721 and lows at 1.5673 but remained supported above this level. The UK claimant count change increased by far more than expected highlighting a weak jobs market. The Bank of England inflationary report left the door open formore easing and expanding the current 325 billion pound asset purchase program. The bank stressed threats to UK growth due to the euro area debt crisis.
The dollar gave up some gains to the yen. USDJPY dipped to 78.33 from 78.59. The yen had been weakening against the greenback since the Bank of Japan’s surprise move Tuesday to expand its asset-buying program.