The Euro made its biggest drop against the Dollar in the past three weeks on Wednesday as soft economic data and comment from European policy-makers indicated the weaker US currency is hurting euro zone economic growth.
A manufacturing activity indicator, the Euro zone PMI, dropped to an almost three-year low in April. Another report showed German manufacturing activity also declined. Demand for the European currency slid further after comments by a member of European Central Bank Governing Council, Christian Noyer, put down speculation of further interest rate increases by the bank. In addition, Jean-Claude Juncker, the chairman of the euro zone finance ministers, said the Euro's exchange rate is now excessively volatile.
Yesterday at close, EurUsd was down 0.59% at 1.5881 , after hitting intraday 1.5999 high. It traded at a record 1.6019 high on Tuesday, the highest level since its inception in 1999. UsdJpy was up 0.54% at 103.48. GbpUsd dropped 0.85% to 1.9791. UsdChf rose
0.62% at 1.6133 after hitting 1.6167 high.
A slide in British mortgage approvals to a record low in March underlined serious weakness in the housing market and suggested the Bank of England may continue cutting rates. The data wiped out initial sterling gains made on BoE minutes showing there was dissent within the central bank over its decision to cut interest rates by 25bp to 5% this month.
The ECB is expected to keep its key interest rate on hold at 4%, while the US Federal Reserve is expected to lower its benchmark from 2.25% later this month. The Euro’s record high on Tuesday was boosted by hawkish remarks from ECB officials, including Noyer's comments in an interview with French radio network RTL that the central bank will do what is needed to being inflation back to target. But Noyer later said markets had misinterpreted his remarks as a hint on the direction in which interest rates might move, The Wall Street Journal reported in its online edition.