RTTNews - The euro rose against the dollar on Tuesday in New York, bouncing back from a near-term low, as greenback traders expressed caution ahead of next week's Federal Reserve interest rate decision. The common currency continued to fall against the sterling and was choppy against the yen.
The common currency rebounded from a 3 1/2 week low against the dollar. In general, the euro has been trending lower throughout most of June since hitting a 5 1/2 month high above 1.43. The euro bounced back slightly against the dollar, rising toward 1.3950 before easing back. Yesterday, the common currency hit as low as 1.3747.
Eurozone annual inflation stayed flat in May, the lowest since records began in 1996, raising deflationary concerns. Meanwhile, a survey showed German economic sentiment improved significantly in June to mark a three-year high on the back of expectations of a recovery by year-end.
The U.S. Labor Department revealed that producer prices rose 0.2 percent in May. This followed a 0.3 percent increase for April and a 1.2 percent decline for March.
The common currency stabilized after extending a 7 1/2-month low against the British pound to 0.8432. The euro has been trending lower for 11 days since it reached above 0.8850.
U.K.'s annual inflation slowed slightly to 2.2% in May from 2.3% last month, a report from the Office for National Statistics showed Tuesday. This was the lowest since January 2008. The annual inflation rate stood above the expected level of 2%, which is also the central bank's target. Month-on-month, consumer prices were up 0.6%, larger than the expected 0.3% increase.
The euro was little-changed amid choppy trading with the Japanese yen after extending its lowest level in nearly three weeks to 132.72 in early trading.
Following a two-day Monetary Policy Meeting, the BoJ retained its uncollateralized overnight call rate at 0.1%. The decision came in-line with expectations. The last change in rate was a 0.10% cut in interest rates at the bank's December 2008 meeting.
A report from the European Union statistics office Eurostat confirmed zero growth in consumer prices that came after a 0.6% increase in April. The statistical office confirmed the initial estimate released on May 29. The European Central Bank aims to keep inflation rates below, but close to, 2% over the medium term.
Consumer prices were up 0.1% month-on-month in May, while economists were expecting a zero reading. The highest monthly contribution came from transport and communications, while the lowest was from recreation and culture and health.
Rising for the eighth month in a row, the ZEW Indicator of Economic Sentiment for Germany stood at 44.8 points in June, up from 31.1 points in May. The latest reading, which is the highest since May 2006, came much better than the 34 points expected by economists. Further, the June reading is above the indicator's historical average of 26.3 points.
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