EU session review: Euro falls on Ireland downgrade

Data released
04:30     Japan     Industrial output (February) final    1.8%    0.4%    0.4%
04:30     Japan     Industrial output (February) final Y/Y    2.9%    2.8%    2.8%
09:00     EU(17)     Harmonized CPI (March) final    1.4%    1.2%    0.4%
09:00     EU(17)     Harmonized CPI (March) final Y/Y    2.7%    2.6%    2.4%
09:00     EU(17)     Harmonized CPI ex EFAT (March) Y/Y    1.3%    1.1%    1.0%
09:00     EU(17)     Trade balance (February) unadjusted, bln     -1.5    -4.2    -14.8
09:00     EU(17)     Trade balance (February) adjusted, bln     -2.4    -    -3.1 (-3.3)

The euro fell against the dollar, yen and pound after Moody’s Investors Service lowered Ireland’s credit rating, stoking concern that Europe’s debt crisis may worsen as Greece battles to avoid a bond restructuring.
The Moody’s cut Ireland to the lowest investment grade and indicated more downgrades may follow.
Europe’s currency fell to an almost one-week low against the dollar yesterday after Germany’s finance minister and Standard & Poor’s said Greece may need to restructure debt to avoid defaulting. Greece will announce more than 22 billion euros of deficit-reduction measures through 2014 today, according to Finance Minister George Papaconstantinou.
The euro has still gained 8% versus the dollar this year on bets accelerating inflation will prompt euro-area policy makers to raise interest rates, even as the so-called peripheral nations struggle to reduce their debt burdens.
The euro stayed lower even as a report showed inflation in the 17-nation euro-region accelerated more than forecast to 2.7% in March, the fastest pace in more than two years.
The European Central Bank raised its key rate last week to 1.25% from a record low 1% and indicated further increases may follow. The Fed has kept its target rate for overnight lending between banks at zero to 0.25% since December 2008.
The yen rallied after China said inflation reached the fastest pace in more than two years, spurring demand for a refuge.
China’s economy grew 9.7% in the first quarter, while consumer prices increased 5.4% in March from a year earlier. The median forecasts were for economic growth of 9.4% and inflation of 5.2%.

EUR/USD fell from $1.4500 to $1.4440. Rate remains under pressure.

GBP/USD holds within the $1.6310/70 range.

USD/JPY printed lows at Y82.90 before recovered to Y83.50. Currently rate holds around Y84.25.

The U.S. consumer-price index climbed 0.5% in March, matching the previous month’s reading, which was the biggest gain since June 2009, a survey showed before the Labor Department data today. Excluding volatile food and fuel costs, so-called core prices may have advanced 0.2% in March for a third month.
Fed Chairman Ben S. Bernanke last week said an acceleration in inflation is likely to be transitory. Fed Bank of Richmond President Jeffrey Lacker said yesterday the central bank should end its stimulus programs before inflation picks up.