Euro weaker ahead of ECB rate meeting

Euro weaker ahead of ECB rate meeting

Story link: Euro weaker ahead of ECB rate meeting

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The US dollar and the Japanese yen both gained on the euro Wednesday as investors saw the two currencies as safe places to put their money ahead of the European Central Bank’s decision on interest rates, due Thursday.

Most bets are that the ECB will cut interest rates by half a percentage point at the meeting.

The gains for the greenback and the yen came as the US Commerce Department reported that retail sales in the United States dropped by 2.7 percent in December, much more of a decline than had been forecast.

It was the sixth month in a row that US sales declined.

In late morning trade in New York the dollar traded at $1.3151 to the euro while it took ¥116.8267 to buy a euro and the yen traded at ¥88.835 to the dollar.

The yen also gained on the New Zealand dollar on a move away from carry trades as investors became wary of the risky currency investments.

The yen traded at ¥48.2205 to the New Zealand currency at late morning in New York.

Meanwhile, the Mexican peso weakened against both the US dollar and the yen in the general flight from risk.

Additionally, the decline in US retail sales raised concerns that US demand for Mexican products will decline, while the possibility that Banco de Mexico will cut interest rates at its 16 January meeting also hurt the peso.

At around 11:30 a.m. in New York, the peso traded at 14.0965 to the US dollar while it took ¥6.3147 to buy a peso.