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Wednesday during early European deals, the US dollar reversed its Asian session's downtrend against other major currencies. The dollar thus climbed to a 16-day high versus the British pound.
Against the European currency, the US dollar gained ground after hitting a low of 1.2641 at 3:15 am ET Wednesday. The dollar is currently trading at 1.2584 against the euro, with 1.233 seen as the next target level. The euro-dollar pair closed Tuesday's North American session at 1.2583.
The Eurostat said today that the Euro zone construction output declined 2.2% month-on-month in December, compared with a revised 1.7% fall in the previous month. Year-on-year, the construction output dropped 10.1% in December, after falling a revised 5.1% in November.
The US dollar that closed Tuesday's North American session at 1.4239 against the British pound touched a low of 1.4301 at 2:30 am ET Wednesday. Thereafter, the dollar reversed its direction and climbed to a 16-day high of 1.4097 against the pound at 4:30 am ET. The next upside target level for the greenback is seen around 1.351. The pound-dollar pair is now worth 1.4163.
The minutes of the Bank of England's Monetary Policy Committee meeting showed today that policymakers were split while deciding on a 50 basis points rate cut. The meeting was held on February 4 and 5.
Eight members of the Committee voted to reduce the Bank Rate by 50 basis points to 1%. The well-known dove of the rate setting body, David Blanchflower preferred a reduction of 100 basis points.
The interest rate now stands at the lowest level since the central bank was established in 1694.
The US currency advanced to 1.1764 against the Swiss franc at 5:10 am ET Wednesday, moving from an Asian session's low of 1.1654. On the upside, 1.183 is seen as the next target level for the greenback. The dollar-franc pair closed Tuesday's New York deals at 1.1697.
The US dollar that slipped to 92.11 against the Japanese yen during early Asian deals on Wednesday strengthened thereafter. At 2:55 am ET, the dollar- yen pair reached a high of 92.65, compared to Tuesday's closing value of 92.42. If the pair gains further, 93.0 is seen as the next target level.
A final report from the Economic and Social Research Institute showed that the Japanese leading index stood at 80 in December, revised up from the initial estimate of 79.8. In November, the reading was 81.8. Meanwhile, the coincident index for December was upwardly revised to 92.4 from 92.3. However, the reading was below November's 94.9.
The Bank of Japan began its two-day policy meeting today. Analysts expect the central bank to leave its interest rate unchanged at 0.10% at the end of the meeting tomorrow.
Traders now likely to focus on the North American session, in which the US import and export price indexes, housing starts and the industrial production reports-all for the month of January have been slated for release.
Cleveland Federal Reserve President Sandra Pianalto, a non-voting member of the FOMC, is due to speak at a breakfast for commercial developers in Columbus, Ohio at 9:00 am ET. Meanwhile, the Federal Reserve Chairman Ben Bernanke is scheduled to speak at the National Press Club at 12:30 pm ET.
The Federal Reserve is scheduled to release the minutes of its January 28th meeting at 2 pm ET. As expected, the Fed maintained its key fed funds rate target unchanged at 0%-0.25% at its January meeting.
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