The euro traded near a one-month low before data today that analysts said will show inflation slowed in the region, boosting bets the European Central Bank will signal stimulus measures at a policy meeting this week.
The dollar climbed to a two-week high versus the yen before Federal Reserve Chair Janet Yellen speaks and ahead of figures tomorrow forecast to show U.S. manufacturing strengthened this month. Australia’s currency pared an advance in March against all Group-of-10 peers before a Reserve Bank policy decision tomorrow at which economists expect officials to refrain from lowering borrowing costs for a third-straight time this year.
“If the euro area’s inflation estimate comes in below consensus, it’ll feed speculation of further easing,” said Toshiya Yamauchi, a senior analyst in Tokyo at Ueda Harlow Ltd., which provides margin-trading services. “The euro could drop below $1.37.”
The euro was little changed at $1.3756 as of 8:35 a.m. London time after reaching $1.3705 on March 28, the lowest since Feb. 28. It is little changed against the greenback since Dec. 31. Europe’s shared currency advanced 0.2 percent to 141.71 yen, set for a 2.1 percent drop this quarter.
The dollar rose 0.1 percent to 102.97 yen after reaching 103 yen, the most since March 12. It has fallen 2.2 percent against its Japanese counterpart this year.
The European Union’s statistics office will say in an initial estimate today that consumer prices in the region rose 0.6 percent this month from a year earlier, compared with a 0.7 percent final figure for February, according to economists surveyed by Bloomberg News.
ECB officials meeting on April 3 will keep the benchmark rate at a record-low 0.25 percent, according to a separate survey. President Mario Draghi said on March 25 that policy makers “stand ready to take additional monetary policy measures that ensure our mandate is fulfilled.”
The euro has declined 0.5 percent this year against, according to Bloomberg Correlation-Weighted Indexes that track 10 developed-nation currencies. The dollar has lost 0.6 percent, while the yen has risen 1.9 percent.
Yellen is scheduled to deliver remarks at a conference in Chicago today. The U.S. central bank head said this month borrowing costs could rise “around six months” after officials end the Fed’s monthly bond-buying program, which currently stands at $55 billion. The Federal Open Market Committee next meets on April 29-30.
The Institute for Supply Management’s U.S. manufacturing index climbed to 54 this month from 53.2 in February, according to the median forecast of analysts. The Tempe, Arizona-based group will report tomorrow.
Employers in the world’s biggest economy added 200,000 jobs in March, a separate survey showed before the Labor Department figure on April 4. If confirmed, that would be the most since November.
“We expect better data to have a more widespread supportive impact on the USD, especially in light of the market’s reluctance to embrace thus far the modest improvements that have been seen in a number of key economic indicators,” National Australia Bank Ltd. analysts including Ray Attrill, the Sydney-based global co-head of currency strategy, wrote in an e-mailed note to clients today.
The Australian dollar retreated from near a four-month high reached at the end of last week. It’s still set for its best quarterly performance since 2011 against the greenback. All of 33 economists surveyed by Bloomberg News expect no change in the cash rate from a record-low 2.5 percent at tomorrow’s meeting.
“I’d expect the Aussie to really tread water until tomorrow’s RBA,” said Sue Trinh, a senior currency strategist at Royal Bank of Canada in Hong Kong. “All focus will be on the RBA’s view of the exchange rate at these levels and this recent pace of appreciation, as well as any potential forward-looking language.”
Deutsche Bank AG lowered estimates for growth in China, Australia’s biggest trading partner. China’s economy will expand 7.8 percent this year, and 8.0 percent next year, compared with previous estimates for 8.6 percent growth in 2014 and 8.2 percent in 2015, Taimur Baig, chief economist for Asia, wrote in a note dated March 28.
The Aussie declined 0.1 percent to 92.40 U.S. cents after reaching 92.95 on March 28, a level not seen since Nov. 21. It is set for a 3.6 percent quarterly advance.
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