Investing.com - The dollar traded lower against most major currencies on Wednesday amid dovish ECB comments out of Europe, bullish BoE reports out of the U.K. and ongoing uncertainty over the fate of the Federal Reserve's ultra-loose monetary policies.
In U.S. trading on Wednesday, EUR/USD was up 0.20% at 1.3463.
The euro took a hit earlier after ECB executive board member Peter Praet told the Wall Street Journal that the bank could cut deposit rates to below zero and commence asset purchases to lift inflation closer to its target of just below 2%.
Praet's comments came amid fears that deflationary pressures are growing in the euro area. The euro zone's annual inflation rate fell to a four-year low of 0.7% in October, prompting the ECB to cut rates to a record low 0.25% last Thursday.
Data released on Tuesday showed that Germany's annual consumer price index slowed to 1.2% in October, in line with expectations though still at its lowest level in more than three years and also down from 1.4% in September.
Still, the euro managed to push back into positive territory on sentiments that currency was oversold in earlier trading and due to uncertainty ahead of incoming Federal Reserve Chair Janet Yellen's congressional testimony on Thursday.
Yellen, a known policy dove, will appear before the Senate Banking Committee, and will likely defend the past several years of ultra-loose monetary policies under current Chair Ben Bernanke that have swelled the Fed's balance sheet to around USD4 trillion.
Atlanta Fed President Dennis Lockhart said earlier this week that the U.S. central bank could begin to reduce the pace of its monthly bond purchases as soon as December, while Dallas Fed President Richard Fisher, a noted hawk, add that “at some point we will have to taper.”
Expectations for an imminent decision to scale back stimulus measures grew last week U.S. employment and economic growth rates beat expectations.
Still, the dollar came under pressure in afternoon trading on Wednesday amid sentiments that tapering could begin in March at Yellen's first monetary policy meeting.
The greenback was down against the pound, with GBP/USD up 0.77% at 1.6027.
The pound saw support after the BoE’s quarterly inflation report released earlier predicted that the U.K.'s unemployment rate will fall faster than it expected three months ago.
BoE Governor Mark Carney stressed that there is a "two in five chance" that it could be 7% at the end of 2014, though the central bank reiterated that the unemployment rate falling below 7% would not automatically trigger an increase in interest rates.
Still, the optimistic outlook gave the pound support.
The BoE added it now expects economic growth of 1.6% this year, up from 1.4% predicted in August, and said growth will hit 2.8% in 2014, up from 2.5%. The bank still expects growth of 2.3% in 2015.
The bank said inflation fell back in the four months to October somewhat more than expected at the time of the August report. The near-term inflation outlook is lower than expected three months ago, and inflation is likely to fall a little further during 2014, helped by the recent appreciation in sterling.
Separately, the Office for National Statistics on Wednesday said that the number of individuals claiming unemployment benefits in the U.K. fell by 41,700 in October, better than expectations for a decline of 35,000 people.
September’s figure was revised to a drop of 44,700 people from a previously reported decline of 41,700.
The unemployment rate ticked down to 7.6% in the three months to September the ONS said.
Economists had expected the unemployment rate to remain unchanged at 7.7%.
The dollar was down against the yen, with USD/JPY down 0.29% at 99.35, and down against the Swiss franc, with USD/CHF down 0.27% at 0.9150.
The dollar was down against its cousins in Canada, Australia and New Zealand, with USD/CAD down 0.28% at 1.0465, AUD/USD up 0.25% at 0.9324 and NZD/USD trading up 0.42% at 0.8256.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.29% at 81.22.
On Thursday, the U.S. is to release its weekly report on initial jobless claims.
In U.S. trading on Wednesday, EUR/USD was up 0.20% at 1.3463.
The euro took a hit earlier after ECB executive board member Peter Praet told the Wall Street Journal that the bank could cut deposit rates to below zero and commence asset purchases to lift inflation closer to its target of just below 2%.
Praet's comments came amid fears that deflationary pressures are growing in the euro area. The euro zone's annual inflation rate fell to a four-year low of 0.7% in October, prompting the ECB to cut rates to a record low 0.25% last Thursday.
Data released on Tuesday showed that Germany's annual consumer price index slowed to 1.2% in October, in line with expectations though still at its lowest level in more than three years and also down from 1.4% in September.
Still, the euro managed to push back into positive territory on sentiments that currency was oversold in earlier trading and due to uncertainty ahead of incoming Federal Reserve Chair Janet Yellen's congressional testimony on Thursday.
Yellen, a known policy dove, will appear before the Senate Banking Committee, and will likely defend the past several years of ultra-loose monetary policies under current Chair Ben Bernanke that have swelled the Fed's balance sheet to around USD4 trillion.
Atlanta Fed President Dennis Lockhart said earlier this week that the U.S. central bank could begin to reduce the pace of its monthly bond purchases as soon as December, while Dallas Fed President Richard Fisher, a noted hawk, add that “at some point we will have to taper.”
Expectations for an imminent decision to scale back stimulus measures grew last week U.S. employment and economic growth rates beat expectations.
Still, the dollar came under pressure in afternoon trading on Wednesday amid sentiments that tapering could begin in March at Yellen's first monetary policy meeting.
The greenback was down against the pound, with GBP/USD up 0.77% at 1.6027.
The pound saw support after the BoE’s quarterly inflation report released earlier predicted that the U.K.'s unemployment rate will fall faster than it expected three months ago.
BoE Governor Mark Carney stressed that there is a "two in five chance" that it could be 7% at the end of 2014, though the central bank reiterated that the unemployment rate falling below 7% would not automatically trigger an increase in interest rates.
Still, the optimistic outlook gave the pound support.
The BoE added it now expects economic growth of 1.6% this year, up from 1.4% predicted in August, and said growth will hit 2.8% in 2014, up from 2.5%. The bank still expects growth of 2.3% in 2015.
The bank said inflation fell back in the four months to October somewhat more than expected at the time of the August report. The near-term inflation outlook is lower than expected three months ago, and inflation is likely to fall a little further during 2014, helped by the recent appreciation in sterling.
Separately, the Office for National Statistics on Wednesday said that the number of individuals claiming unemployment benefits in the U.K. fell by 41,700 in October, better than expectations for a decline of 35,000 people.
September’s figure was revised to a drop of 44,700 people from a previously reported decline of 41,700.
The unemployment rate ticked down to 7.6% in the three months to September the ONS said.
Economists had expected the unemployment rate to remain unchanged at 7.7%.
The dollar was down against the yen, with USD/JPY down 0.29% at 99.35, and down against the Swiss franc, with USD/CHF down 0.27% at 0.9150.
The dollar was down against its cousins in Canada, Australia and New Zealand, with USD/CAD down 0.28% at 1.0465, AUD/USD up 0.25% at 0.9324 and NZD/USD trading up 0.42% at 0.8256.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.29% at 81.22.
On Thursday, the U.S. is to release its weekly report on initial jobless claims.