The dollar plunged against the yen and euro on Wednesday as Treasury yields and U.S. stock prices fell, while U.S. manufacturing sector fell more than forecasted.
The dollar plunged 0.26 percent to 102.32 yen, while the euro fell 0.04 percent to trade at 141.52 yen. The euro grew 0.23 percent to stand at $1.3835, and gained 0.48 percent against the British pound to 82.41 pence. The pound declined 0.22 percent to $1.6783.
The U.S. dollar fell 0.11 percent relative to a pool of major currencies as tracked by Reuters.
“As (U.S.) equities underperform, this leads to buying of Treasuries and yields fall. The dollar is softer as a result because it is reflecting other markets rather than internal components,” Sebastian Galy, a New York-based senior currency strategist at Societe Generale told Reuters.
U.S. factory activity grew in February, though at a slower pace than forecasted while inventories declined. Sales of new homes in March also declined to the lowest level since last July.
The British pound reported losses after minutes of Bank of England’s meeting showed there were no immediate plans to hike the interest rates owing to the presence of some economic slack.
Euro zone’s April factory activity advanced more than economists had predicted to the strongest level in nearly three years. However, the euro remained subdued as traders fretted over the probability that the European Central Bank may roll out economic stimulus should it get stronger, while low inflation took its toll.
European Central Bank’s President Mario Draghi has repeatedly said that he will launch a monetary easing policy should the 18-nation currency strengthen any further. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.
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