EU session review: Dollar index declines to lowest since 2008

Data released:
06:00     Germany     Import prices (March)    1.1%    1.1%    1.1%
06:00     Germany     Import prices (March) Y/Y    11.3%    11.3%    11.9%
06:00     Germany     Import prices excluding oil (March) Y/Y         -    8.8%
06:45     France     Consumer spending (March)    -0.7%    0.3%    0.9%
06:45     France     Consumer spending (March) Y/Y     2.6%    3.7%    5.5%
07:55     Germany     Unemployment (April) seasonally adjusted    -37K    -32K    -55K
07:55     Germany     Unemployment (April) seasonally adjusted, mln         -    -
07:55     Germany     Unemployment rate (April) seasonally adjusted    7.1%    7.0%    7.1%

The Dollar Index fell to its lowest level since 2008 as the Federal Reserve’s pledge to keep interest rates near zero to stimulate growth spurred investors to buy higher-yielding assets.
The Australian dollar climbed to a record against its U.S. counterpart amid speculation the South Pacific nation will raise rates to contain inflation.
“It’s still a broadly negative dollar story,” said Lee Hardman, a currency strategist at Bank of Tokyo-Mitsubishi UFJ Ltd.. “There’s not much change to the outlook for Fed policy. The downtrend for aggressive dollar selling is firmly entrenched.”
The dollar has lost 1.1% in the past week, extending this year’s decline to 6.9%. The yen has fallen 0.9% this week, and has lost 7.6% this year.
The Dollar Index fell for an eighth day, its longest losing run since March 2009, after Fed Chairman Ben S. Bernanke signaled yesterday in his first press conference following a policy decision that the central bank intends to maintain monetary stimulus.
Fed policy makers kept the target rate for overnight lending between banks at zero to 0.25%. The rate has remained at that level since December 2008.
Australia’s dollar appreciated as traders boosted bets that the central bank will increase borrowing costs. The Reserve Bank of Australia will raise its target rate of 4.75% by 25 basis points over the next 12 months, up from 19 basis points a week earlier.

EUR/USD corrected to $1.4795 before it rose to 17-months highs around $1.4880 earlier.

GBP/USD back to $1.6660 after rising up to highs near $1.6740.

USD/JPY fell to a session low on Y81.50 before back to Y81.82.


In the US, also at 1230GMT, the main release is the Q1 US GDP data and the April 23 week jobless claims data. The advance estimate for first quarter GDP is expected to be at a 1.8% rate of growth, down from the 3.1% gain in the previous quarter.