Investing.com - The dollar was steady against the euro and the yen on Wednesday as investors looked ahead to a fresh batch of U.S. economic reports and a European Central Bank meeting for further indications on the direction of monetary policy.
EUR/USD was at five-week lows of 1.1163, while USD/JPY was last at 119.73, holding below Tuesday’s highs of 120.25.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was steady at 95.50, not far from 11-year peaks.
The dollar has strengthened so far this year as upbeat economic data indicated that the economic recovery was on track, supporting expectations for higher interest rates.
The U.S. was to release survey data on service sector activity and a report on private sector jobs growth later Wednesday, ahead of Friday’s nonfarm payrolls report.
The euro remained under pressure as investors turned their attention to the upcoming ECB meeting on Thursday, when it was expected to announce details of its quantitative easing program, which is due to start this month.
Elsewhere, the euro was little changed against the yen, with EUR/JPY at 133.77.
Investing.com - The pound fell to two week lows against the dollar on Wednesday after data showing British service sector output expanded at a slower rate than expected last month but still posted solid growth.
GBP/USD eased 0.12% to 1.5342 from around 1.5358 ahead of the data.
Research group Markit said the services purchasing managers’ index ticked down to 56.7 from 57.2 in January. Economists had expected the index to rise to 57.5.
On the index, a level above 50.0 indicates expansion in the industry, below 50.0 indicates contraction.
“Although the rate of expansion slowed in the vast services economy, growth has picked up in both manufacturing and construction," Chris Williamson, chief economist at survey compilers Markit said.
"The three PMI surveys collectively indicated a slight acceleration in economic growth for a second successive month in February as a result, consistent with GDP growth picking up to 0.6% in the first quarter."
EUR/GBP was down 0.26% to 0.7255, after falling to fresh seven-year lows of 0.7235 earlier.
The single currency found support after a report on Wednesday showed that the euro zone services sector PMI increased to 53.7 in February from a final reading of 52.7 in January.
The composite PMI, which measures services and manufacturing activity across the region, rose to a seven-month high of 53.3 in February from 52.6 in January.
The euro remained under pressure as investors turned their attention to the upcoming European Central Bank meeting on Thursday, when it was expected to announce details of its quantitative easing program, which is due to start this month.
Saudi Arabia, the world’s largest crude exporter, increased the pricing terms for Arab Light sold to Asia by the most in three years as demand improved. State-owned Saudi Arabian Oil Co. said Tuesday it will sell cargoes of Arab Light in April at 90 cents a barrel below Asia’s regional benchmark. That narrows the discount by $1.40 from March, the biggest price increase since January 2012, according to data compiled by Bloomberg. The company also raised prices it offers to refiners in the U.S.
“We expected an increase, but the degree of increase is on the higher side of expectations,” Eugene Lindell, a senior analyst at JBC Energy GmbH in Vienna, said Tuesday by phone. “The Asian market is a little bit stronger compared to the last months,” and Aramco’s adjustments reflect that strength.
Three months after Saudi Arabia made clear it would defend market share against rising U.S. production rather than cut output to support prices, the strategy is showing signs of working, according to analysts from banks including Standard Chartered Plc and Bank of America Corp. Oil producers outside the Organization of Petroleum Exporting Countries are curbing investment and idling drilling rigs. Demand is growing and the market is calm, Saudi Oil Minister Ali Al-Naimi said Feb. 25.
About Stuart McPhee
Senior Currency Technical Analyst, Stuart McPhee has more than 16 years’ experience as a private trader and he specializes in technical market analysis of major currency pairs. He is the author of several bestselling trading books, most recently the fourth edition of his popular book “Trading in a Nutshell” (John Wiley), and he contributes articles to daily newsletters and blogs. He produces articles and videos on the how-tos of technical trading. Based in Australia, Stuart speaks at conferences and events worldwide.
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