There was limited movement in the currency markets on Wednesday and the US dollar was broadly weaker, pausing a strong rally that took place in recent weeks.
The euro was flat during the Asian and European session and began falling as the US session came around.
There was a disappointing German Ifo survey on business sentiment which weighed on the euro. The data come after recent dismal data on the German ZEW and flash PMIs .
The euro traded around 1.2845 before falling towards the key 1.2800 support level in early US trading hours.
Sterling held steady against the dollar at 1.6382 and hovered near a two-year high against the euro, trading at 0.7822 today. The pound has stabilized since weakening in the build up to the Scottish referendum last week, which took it down to 10-montn low versus the USD.
The next key risk event for sterling will be Bank of England Governor Mark Carney’s speech on Thursday in Wales. Markets will look out to see if there will be any hint of the timing of the first rate hike. Current speculation is that interest rates will be raised in the spring of 2015.
The yen was firmer today as a result of comments made by Japanese Prime Minister Shinzo Abe that signaled concern for the yen weakness.
Abe remarked that the exchange rate could have an impact on small companies. An important risk event for the yen will be Thursday’s release of Japanese CPI.
The dollar traded a small range against the yen in the European session, between 108.48 and 108.79.
There are limited economic data releases in the US session today, with only new US home sales on the agenda. They are expected to show a modest gain to 430,000. Fed speakers will be watched. These include Loretta Mester and Charles Evans.