The euro traded mixed against the US dollar yesterday, falling sharply in the morning as the market braced for another batch of US data following fresh signs of weakness in the world's largest economy. Market players were looking ahead to US data including consumer prices, housing figures and the Federal Reserve's Beige Book survey of economic conditions, and were hesitant about the data following the release of worse than expected Retail Sales figures on Tuesday. The euro was also undermined by comments from ECB council member Axel Weber, who said the central bank will announce a package of ‘non-standard measures’ in May.
In the afternoon the euro recovered some ground against the US dollar, after the Fed’s Beige Book showed that the US economic contraction continued through early April but the pace of decline was decelerating in 5 of the 12 Federal districts. The Dow Jones rose following this news, improving risk appetite.
The dollar was also pressured a little yesterday by rising gold prices, as strong physical demand from the world's largest bullion market, India, offset worries caused by a surprise drop in US consumer inflation, which could dent the metal's allure as an inflation hedge. Gold is often bought as an alternative investment to the US currency.
However, the euro has weakened against the dollar again this morning in the run up to the release of eurozone Consumer Price Index and Industrial Production figures at 10.00 BST. In the US Jobless Claims figures, housing data and the Philadelphia Fed survey are released this afternoon.
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