The single currency slipped back from a fresh 14-month high against the dollar following further comments from the ECB that expressed apprehension over the euro’s strength.
- In early trading, options buying once again prevented the euro from pushing through the psychologically important $1.50 level, posting a high of $1.4993.
- The single currency was supported after further positive corporate earnings weighed on haven demand for the dollar, emboldening investors to sell the low-yielding US unit to fund the purchase of riskier, higher-yielding assets elsewhere.
- However the euro fell back as the ECB repeated their support for the US Treasury’s self-professed strong-dollar policy, and expressed concerns over recent “volatile” trends in the market and the strength of the single currency
- In the afternoon Wall street slipped as tame US inflation data offset strong quarterly earnings from Apple, denting investor appetite to sell the low-yield dollar.
- The economic data, which showed that the US PPI unexpectedly dropped by 0.6% last month, disappointed market expectations and helped the greenback recover earlier losses, though analysts said that it would remain under pressure as long as stocks continued to show an upward trend.