The German preliminary consumer price index rose to 0.3% year-on-year in March as forecast and above February’s 0.1% reading. Meanwhile on a month-on-month basis, CPI was lower at 0.5% from the prior month’s 0.9% reading but in line with expectations.
The euro fell in the Asian session and touched a low of 1.0812 in Europe. Headlines regarding Greece will be a key driver for the single currency. There are media reports that a Euro Working Group could meet by Thursday this week. Greece’s creditors are studying the reform program which the Greek government submitted over the weekend in order to release funds to the country. Greece is expected to run out of money by April 20 if it doesn’t receive bailout funds by then.
Sterling lost all gains made on Friday when Bank of England Governor Mark Carney said the next move in interest rates was likely to be upward. Concerns about the upcoming UK election in May are weighing on the currency. The pound hit a session high of 1.4865 before easing down to 1.4751. Campaigning kicked off this week as the Parliament was dissolved. Polls over the weekend show a slight lead by the Labour Party (some showing a 4% lead).
The worst performer today was the Australian dollar as it tumbled below the key 0.7700 level to 0.7639. The risk of a rate cut by the Reserve Bank of Australia next week is weighing on the aussie.
The greenback extended gains versus the yen to reach a high of 120.04. US consumer spending rose less- than- forecast in February and capped further gains but better-than-expected pending home sales helped support. The 0.1% increase in consumer purchases followed a 0.2% drop in January. Pending home sales in February increased to their highest level since June 2013 rose 3.1% in February from a slight downward revision 1.2% in January and above the 0.5% forecast. The main driver of the dollar will be Friday’s nonfarm payrolls report.