The single currency tumbled from 1.5539 to 1.5366 after the release of eurozone retail sales, which unexpectedly fell by 0.4% in March. German factory orders also dropped 55 in the year ended in March, compared with an 8.9 % increase in the prior month. , The week economic data added speculation that the European Central Bank will keep rates unchanged on Thursday as economic growth is slowing.

U.S. productivity rose at a 2.2% annual rate in the first quarter of 2008 after a 1.8% increase in the last quarter of 2007, The Federal Reserve said rate reductions to date were ‘substantial’ after lowering its target lending rate on April 30 by a quarter-percentage point to 2%, its seventh cut since September. Interest-rate futures showed an 86 % chance that the Fed will hold borrowing costs steady at its June 25 meeting. Kansas City Fed President Thomas Hoenig said that ‘serious’ U.S. inflation pressure may compel the central bank to increase interest rates.

The greenback rose against the Japanese yen to 105.59 and then retreated to 104.61 on active cross buying in jpy due to the selloff in U.S. stocks. Dow Jones industrial average dropped by 206 to 12814. The Standard & Poor’s 500 Index was down 25.69 points to 1392.57. The Nasdaq Composite Index weakened by 44.82 points to 2438.49. The single currency tumbled versus the Japanese yen from 163.07 to 161.02.

The British pound fell to a 2 1/2-month low of 1.9503 as U.K. Nationwide consumer confidence declined to 70 in April. U.K. industrial and manufacturing production both fell by 0.5% in March, adding speculation the Bank of England will continue to cut interest although the Bank of England is expected to keep interest rates unchanged at 5.00% on Thursday.

Australian dollar and New Zealand dollar fell against U.S. currency from 0.9507 to 0.9407 and from 0.7912 to 0.7810 respectively. The greenback rose rebounded versus Canadian dollar from 1.0006 to 1.0099 on dollar’s broad-based strength.

Thursday will see the release of German trade balance and industrial production, U.S. jobless claims and wholesale inventories. Investors are focusing on the post-meeting news conference that ECB President Jean-Claude Trichet may acknowledge increased downside risks to growth.