Investing.com - The U.S. dollar was lower against all of its major counterparts on Wednesday, as investors looked ahead to a report on the U.S. trade deficit and the release of the minutes of the Federal Reserve’s most recent policy meeting, which could show whether the central bank is leaning toward more stimulus to prop up growth.
During European afternoon trade, the dollar was mildly lower against the euro, with EUR/USD adding 0.11% to hit 1.2263.
Sentiment on the euro remained vulnerable after Germany’s Constitutional Court delayed on Tuesday its decision on whether the euro zone's bailout fund, the European Stability Mechanism, is compatible with German law.
The court said a decision could take months rather than weeks due to the complexity of the ruling. Without German backing, the ESM, which was originally meant to start on July 1, then delayed to July 9, cannot come into effect.
Meanwhile, Spanish Prime Minister Mariano Rajoy announced EUR65 billion of new austerity measures earlier in the day, in an effort to meet new budget-deficit targets agreed with euro zone partners.
However, market analysts warned that the fresh austerity measures were likely to drag Spain’s economy deeper in to a recession.
The fresh budget cuts come a day after the conclusion of the latest meeting of euro zone finance ministers.
While the ministers agreed to grant Spain an extra year through 2014 to reach its deficit reduction targets, they did not come up with a final figure for aid for the country's ailing banks but said some EUR30 billion would be available by the end of this month.
Also Wednesday, Germany saw borrowing costs fall to a record low at an auction of 10-year government bonds, as sustained concerns over the region’s debt crisis continued to boost demand for safe haven bunds.
The greenback was down against the pound, with GBP/USD gaining 0.25% to hit 1.5559.
Sterling remained supported after data on Tuesday showed that manufacturing production rose by 1.2% in May, blowing past expectations for a more modest 0.1% gain, after falling by 0.8% in April.
A separate report showed that the U.K.’s goods trade deficit narrowed more-than-expected in May, as exports picked up from the previous month.
Elsewhere, the greenback was lower against the yen and the Swiss franc, with USD/JPY shedding 0.25% to hit 79.23 and USD/CHF edging down 0.11% to hit 0.9793.
Expectations that the Bank of Japan will hold back from announcing more monetary easing at this week’s policy meeting lent support to the yen.
Elsewhere, the greenback was lower against its Canadian, Australian and New Zealand counterparts, with USD/CAD falling 0.36% to hit 1.0190, AUD/USD rising 0.68% to hit 1.0260 and NZD/USD adding 0.5% to hit 0.7979.
Meanwhile, the dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.2%, to trade at 83.39.
Later in the day, the U.S. was to release official data on trade balance and crude oil stockpiles.
Market players eyed the release of the minutes of the Federal Reserve’s most recent policy meeting later in the day, which could show whether the central bank is leaning toward more stimulus to boost growth.
During European afternoon trade, the dollar was mildly lower against the euro, with EUR/USD adding 0.11% to hit 1.2263.
Sentiment on the euro remained vulnerable after Germany’s Constitutional Court delayed on Tuesday its decision on whether the euro zone's bailout fund, the European Stability Mechanism, is compatible with German law.
The court said a decision could take months rather than weeks due to the complexity of the ruling. Without German backing, the ESM, which was originally meant to start on July 1, then delayed to July 9, cannot come into effect.
Meanwhile, Spanish Prime Minister Mariano Rajoy announced EUR65 billion of new austerity measures earlier in the day, in an effort to meet new budget-deficit targets agreed with euro zone partners.
However, market analysts warned that the fresh austerity measures were likely to drag Spain’s economy deeper in to a recession.
The fresh budget cuts come a day after the conclusion of the latest meeting of euro zone finance ministers.
While the ministers agreed to grant Spain an extra year through 2014 to reach its deficit reduction targets, they did not come up with a final figure for aid for the country's ailing banks but said some EUR30 billion would be available by the end of this month.
Also Wednesday, Germany saw borrowing costs fall to a record low at an auction of 10-year government bonds, as sustained concerns over the region’s debt crisis continued to boost demand for safe haven bunds.
The greenback was down against the pound, with GBP/USD gaining 0.25% to hit 1.5559.
Sterling remained supported after data on Tuesday showed that manufacturing production rose by 1.2% in May, blowing past expectations for a more modest 0.1% gain, after falling by 0.8% in April.
A separate report showed that the U.K.’s goods trade deficit narrowed more-than-expected in May, as exports picked up from the previous month.
Elsewhere, the greenback was lower against the yen and the Swiss franc, with USD/JPY shedding 0.25% to hit 79.23 and USD/CHF edging down 0.11% to hit 0.9793.
Expectations that the Bank of Japan will hold back from announcing more monetary easing at this week’s policy meeting lent support to the yen.
Elsewhere, the greenback was lower against its Canadian, Australian and New Zealand counterparts, with USD/CAD falling 0.36% to hit 1.0190, AUD/USD rising 0.68% to hit 1.0260 and NZD/USD adding 0.5% to hit 0.7979.
Meanwhile, the dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.2%, to trade at 83.39.
Later in the day, the U.S. was to release official data on trade balance and crude oil stockpiles.
Market players eyed the release of the minutes of the Federal Reserve’s most recent policy meeting later in the day, which could show whether the central bank is leaning toward more stimulus to boost growth.