The dollar rallied versus the euro on Wednesday, amd expectations that the European Central Banks may soon announce more liquidity-adding measures in support of the region’s trubled banking sector.
The ECB meets Thursday, and while no change to their benchmark interest rate is forecast, they are seen lowering rates as early as March.
The dollar briefly rose to $1.2685 versus the euro, then leveled off in the $1.27 range. Last week the dollar touched a 16-month peak near $1.2650.
Modest early gains took the dollar to Y77 versus the yen, and the buck improved to $1.5375 versus the sterling.
After a slew of economic data from Europe, traders will now focus on the Federal Reserve’s Beige Book. The Fed’s assessment of the economy based on reports from around the nation is set for release this afternoon at around 2 pm ET. Recent data has indicated an improvement in the jobs market and small signs of hope for housing.
The German economy slowed to 3 percent growth in 2011, down from 3.7 in 2010, with most of last year’s growth coming early in the year, official data showed today.
Demand for German debt remains strong amid lingering concerns over the Eurozone sovereign debt crisis. An auction of a new 5-year German federal notes with a target of EUR 4 billion on Wednesday attracted bids totaling EUR 8.967 billion.