Euro Continues to Creep Higher Against Dollar

By Josie Cox 

        The euro continued to creep higher against the U.S. dollar on Tuesday, ahead of the U.S. Federal Reserve's March policy announcement later in the week, which is expected to shed light on the timing of a rise in interest rates in the U.S.
        Having already recovered some ground Monday, following several weeks of sharp losses against the dollar, the euro was trading 0.3% higher by midmorning at just over $1.06.
        BNP Paribas currency strategists wrote in a note that some disappointing data out of the U.S. had "sapped momentum" from the dollar's recent rally and placed the currency on "tenterhooks" ahead of Wednesday's Federal Open Market Committee announcement. Figures on Monday showed that U.S. industrial production inched up just 0.1% in February on a seasonally adjusted basis, missing expectations.
        So far this year, the euro has slipped by more than 12% against the dollar--a hefty move--but already on Wednesday some strategists noted that positive bets on the dollar had become stretched and that investors should start to account for the possibility that the Fed will retain its patient stance on raising interest rates, particularly in light of the strength of the dollar.
        The euro's move Tuesday was accentuated by an upbeat survey from Germany's ZEW institute, showing that the current conditions index had hit an eight-moth high and the economic sentiment indicator a 13-month high in March.
        Separate data showed that consumer prices across the European Union fell again in February, but at a slower rate--a sign that the threat of a slide into deflation is easing.
        In equity markets, meanwhile, the euro's recovery put a halt to a recent rally.
        The Stoxx Europe 600 index, which on Monday gained just short of 1% on the day, was 0.5% lower by midmorning.
        Germany's DAX 30, packed with industrial exporters and international car makers that tend to be bolstered by a strong dollar and weak euro, fell a little more than 1%, having surged 2.2% on Monday, surpassing the 12,000 mark for the first time in its history.
        In commodity markets, Brent crude extended losses to trade around 1.5% lower on the day at $53.40, still spooked by fears of a global supply glut, while gold edged 0.1% higher to $1,14.10 a troy ounce.
        Write to Josie Cox at josie.cox@wsj.com
        (END) Dow Jones Newswires

        March 17, 2015 06:35 ET (10:35 GMT)

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