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Euro turns lower ahead of EBC policy meeting

Published 07/04/2012, 06:34 AM
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Investing.com - The euro turned lower against its major counterparts on Wednesday, as trade remained thin with U.S. markets closed for a holiday, while investors focused on the outcome of a European Central Bank policy meeting on Thursday.

During European late morning trade, the euro was weaker against the U.S. dollar, with EUR/USD slipping 0.34% to 1.2564.

The ECB was widely expected to cut interest rates to a record low 0.75% from 1.00% to help bolster growth in the region, following a recent string of weak economic data.

Earlier in the day, the final reading of the euro zone services purchasing managers’ index came in at 47.1 in June, slightly above the preliminary estimate of 46.8, but holding below the 50 level which separates contraction from growth for the fifth consecutive month.

Investors were also awaiting Friday’s U.S. nonfarm payrolls report, amid speculation that the Federal Reserve could implement a third round of quantitative easing to shore up the economy, which has been hit by the ongoing crisis in the euro zone.

The euro dipped lower against the pound, with EUR/GBP losing 0.10% to trade at 0.8027.

In the U.K., data showed that service sector activity expanded at the slowest rate in eight months in June, fuelling expectations for a fresh round of quantitative easing from the BoE at its meeting on Thursday.

The Markit/CIPS Services PMI fell to 51.3 in June from a reading of 53.3 in May, missing expectations for a decline to 53.0.

The single currency edged lower against the yen, with EUR/JPY shedding 0.26% to trade at 100.33, but remained little changed against the Swiss franc, with EUR/CHF inching up 0.01% to 1.2011.

The euro was broadly lower against the Canadian, Australian and New Zealand dollars, with EUR/CAD slipping 0.26% to hit 1.2726, EUR/AUD down 0.23% to hit 1.2233 and EUR/NZD falling 0.26% to 1.5641.

The Australian dollar found support earlier after official data showed that domestic retail sales rose 0.5% in May, outstripping expectations for a 0.3% increase, after a 0.1% gain in April.

Elsewhere, official data showed that retail sales in the euro zone rose by a seasonally adjusted 0.6% in May, beating expectations for a 0.3% gain, but total sales for April were revised down to a 1.4% drop from a previously reported decline of 1%.


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