Investing.com - The dollar rallied to 11-year highs against a basket of other major currencies on Wednesday as the euro sank ahead of a European Central Bank meeting where it was expected to announce more detail of its stimulus program.
EUR/USD was last down 0.98% to 1.1064, the weakest since August 2003.
The euro remained under heavy selling pressure ahead of Thursday’s ECB meeting, where President Mario Draghi was expected to announce more details of its quantitative easing program, which is due to start this month.
The drop in the euro came despite data earlier Wednesday showing that the euro zone services sector index increased to 53.7 in February from a final reading of 52.7 in January.
Another report showed that euro zone retail sales jumped sharply higher in January.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, rallied 0.6% to an 11-year high of 96.02.
In the U.S., the Institute of Supply Management reported that service sector activity grew at a faster rate than expected in February, boosting expectations for higher interest rates.
The ISM non-manufacturing index rose to 56.9 from 56.7 in January. Economists had expected the index to tick down to 56.5.
Earlier Wednesday, a report showed that the U.S. private sector added 212,000 jobs in February, falling short of expectations for an increase of 220,000. January’s figure was revised up to 250,000 from a previously reported 213,000.
Investors were turning their attention to Friday’s government nonfarm payrolls report for further indications on the future possible direction of monetary policy.
USD/JPY was last at 119.64, while USD/CHF was up 0.15% to 0.9626.
Sterling was also lower, with GBP/USD down 0.62% to 1.5266. The pound dipped earlier in the day after data showed that British service sector output expanded at a slower rate than expected in February, but still posted solid growth.
The U.K. services index ticked down to 56.7 from 57.2 in January. Economists had expected the index to rise to 57.5.
The Australian dollar was supported after data showing the economy grew in line with forecasts in the fourth quarter. AUD/USD was up 0.12% to 0.7824, off highs of 0.7860, while NZD/USD was up 0.45% to 0.7585.
The Canadian dollar was higher, with USD/CAD down 0.42% to 1.2442 after the Bank of Canada kept interest rates on hold at 0.75% on Wednesday following a surprise rate cut in January.
The bank said financial conditions have eased materially since January, in response to its recent monetary policy action and to global financial developments.