Forexpros – The U.S. dollar remained broadly lower against its major counterparts on Wednesday, after the European Central Bank left interest rates unchanged while investors awaited ECB President Mario Draghi’s statement on monetary policy later in the day.
During European afternoon trade, the dollar was lower against the euro, with EUR/USD rising 0.33% to hit 1.2492.
In a widely expected move, the ECB left its benchmark interest rate unchanged at 1%, but the euro remained supported amid growing expectations that the central bank could indicate that it is willing to ease policy as soon as next month, at the bank’s post-policy meeting press conference.
Investors remained cautious however, after Spain warned on Tuesday that it was having difficulty accessing credit markets, while uncertainty over the outcome of Greek elections on June 17 also weighed.
Earlier, revised data showed that the euro zone economy was stagnant in the first quarter, in line with preliminary estimates, but gross domestic product contracted at an annualized rate of 0.1% in the three months to March, compared to a preliminary flat reading.
A separate report showed that German industrial production dropped 2.2% in April, compared to expectations for a more modest 1.0% decline, fuelling concerns over the impact of the ongoing sovereign debt crisis on the region’s largest economy.
The greenback was also lower against the pound, with GBP/USD climbing 0.67% to hit 1.5486.
Earlier in the day, the Markit/CIPS U.K. construction purchasing managers’ index came in at 54.4 in May, down on April’s 55.8, but still well above the 50-point mark that separates growth from contraction.
Economists had expected the index to decline to 54.2 in May.
Elsewhere, the greenback rose against the yen but was lower against the Swiss franc, with USD/JPY advancing 0.51% to hit 79.15 and USD/CHF shedding 0.34% to hit 0.9613.
In addition, the greenback was sharply lower against its Canadian, Australian and New Zealand counterparts, with USD/CAD declining 0.40% to hit 1.0336, AUD/USD surging 1.20% to hit 0.9859 and NZD/USD jumping 0.85% to hit 0.7627.
The risk-related currencies found strong support after official data showed earlier that first quarter economic growth in Australia outstripped expectations, with gross domestic product expanding 1.3%, well above forecasts for a gain of 0.5%.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, fell 0.26%, to trade at 82.67.
Later in the day, the U.S. was to release revised data on nonfarm productivity, followed by government data on crude oil stockpiles, while the Federal Reserve was to release its Beige Book.
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