Euro Near 6-Week Low as Inflation Set to Fall to Three-Year Low

The euro slid toward a six-week low before a report that will probably confirm inflation in the 17-nation region was the slowest in three years.

The common currency completed a five-day drop yesterday, the longest losing stretch in six months, on speculation the European Central Bank will ease policy after data showed the euro-area economy extended its recession to a record sixth quarter. The Dollar Index (DXY) was 0.5 percent from its highest level since July before Federal Reserve Bank of San Francisco President John Williams speaks. The yen advanced after reports showed the nation’s economy expanded more than forecast.

“The euro will probably continue its downward trend,” said Junichi Ishikawa, an analyst at IG Markets Securities Ltd. in Tokyo. “Should CPI data confirm low inflation, that would further heighten expectations of an ECB rate cut.”

The euro was little changed at $1.2888 as of 9:29 a.m. in Tokyo after yesterday touching $1.2843, the weakest since April 4. The shared currency slipped 0.2 percent to 131.54 yen. The dollar traded at 102.23 yen from 102.25 yesterday, when it touched 102.76, the strongest level since October 2008.

The Dollar Index, which Intercontinental Exchange Inc. uses to track the currency against those of six major U.S. trade partners, declined 0.1 percent to 83.707 and yesterday reached 84.094, the highest level since July 24.

(Source: Bloomberg)

WTI Crude Trades Near One-Week Low as U.S. Supplies Seen Rising

West Texas Intermediate crude traded near the lowest level in more than a week before government data that may show U.S. stockpiles climbed a fourth week to the highest since at least 1931.

Futures were little changed in New York after declining a third day yesterday. U.S. crude inventories probably increased 450,000 barrels last week to 396 million, according to the median estimate of 10 analysts in a Bloomberg News survey. The industry-funded American Petroleum Institute is scheduled to release separate stockpile figures today. London-traded Brent’s premium to WTI shrank to the narrowest since January 2011.

WTI for June delivery was at $95.20 a barrel, up 3 cents, in electronic trading on the New York Mercantile Exchange at 9:31 a.m. Sydney time. The volume of all contracts traded was 76 percent below the 100-day average. Prices decreased 87 cents, or 0.9 percent, to $95.17 yesterday, the lowest close since May 2.

Brent for June settlement slipped $1.09 to $102.82 a barrel on the London-based ICE Futures Europe exchange yesterday. The front-month European benchmark ended the session at a premium of $7.65 to WTI futures.

U.S. gasoline supplies probably fell by 1.1 million barrels last week, the Bloomberg survey shows. Distillate inventories, a category that include heating oil and diesel, climbed by 425,000 barrels, according to the survey.

(Source: Bloomberg)

Euro Holds Loss as Europe’s Factories Seen Slowing

The euro remained lower against the dollar before data forecast to show factory activity slowed in Europe’s two biggest economies.

European Central Bank President Mario Draghi said yesterday that further interest-rate cuts are possible after reducing them to a record low last week. The yen rebounded from a three-day decline against the greenback, the longest streak in more than two weeks. The Australian dollar fell against all of its 16 most-traded peers on prospects the central bank may cut borrowing costs to a record low today.

“The euro will probably continue to grind lower,” said Yuki Sakasai, a foreign-exchange strategist at Barclays Plc in New York. “President Draghi made some bold remarks about the possibility of cutting the deposit rate to zero. As Draghi noted, the economic data will be key going forward. Europe is likely to underperform the U.S.”

The euro was little changed at $1.3075 as of 10:23 a.m. in Tokyo from yesterday, when it slid 0.3 percent. It fell 0.4 percent to 129.18 yen. Japan’s currency rose 0.4 percent to 98.96 per dollar, after depreciating 2 percent in the past three sessions.

German factory orders and French industrial production both fell in March from the previous month, according to the median economist forecasts in Bloomberg News surveys. German orders probably slid 0.5 percent, while French activity contracted 0.3 percent.

“We will be looking at all the data that arrives from the euro-area economy in the coming weeks and, if necessary, we are ready to act again,” Draghi said yesterday after the ECB cut its benchmark rate to 0.5 percent last week. He said policy makers had an open mind on a negative deposit rate.

(Source: Bloomberg)