The dollar was once again battered on Wednesday amid mounting speculation that the U.S. will lag behind other developed economies in raising interest rates to combat rising prices.
Troubling producer price figures from Europe fueled predictions that the European Central Bank will raise interest rates soon, if not tomorrow.
The ECB makes its latest decision on rates Thursday morning, and while a rate hike is a long shot, policy makers are expected signal their growing discomfort with higher food and energy prices.
U.S. Crude oil burst above $100 a barrel this morning.
The dollar dropped to a 4-month low near $1.39 versus the euro, and extended a yearly low to $1.6530 against the sterling.
The euro zone’s producer price index (PPI) rose 6.1 percent year-on-year following the 5.3 percent increase in December, Eurostat said Wednesday. That was quicker than the 5.7 percent growth economists had expected and was the fastest increase since October 2008.
The buck also tumbled versus the yen, dropping to a low of Y81.70.
There was little movement against Canada’s loonie, with the dollar hovering yesterday’s 3-year low below C$0.97.
In economic news from the U.S., private sector employment increased by much more than anticipated in the month of February, according to a report released by Automatic Data Processing, Inc. (ADP) on Wednesday, with the report suggesting continued solid private job growth in early 2011