ISSN: 2056-3736 (Online Version) | 2056-3728 (Print Version)


NEW YORK (MarketWatch) — The euro recovered most of its loss against the dollar Thursday as investors sorted through a round of mixed U.S. economic data. The euro had dropped as the euro-zone economy posted weak first-quarter growth, the latest indicator that the European Central Bank could ease policy further next month.

The move higher began around the time that a reading on U.S. home-builder confidence fell to its lowest level in a year. Industrial production slid 0.6% in April, missing expectations of a 0.2% decline.

 Adding to the flood of economic news, U.S. weekly jobless claims dropped to their lowest level since May 2007. Consumer prices jumped in April by the most since last summer, with the consumer price index increasing a seasonally adjusted 0.3%. Manufacturing expanded in the New York area in May as the Empire state index surged to 19.0. Read: The economy improving faster than markets and Fed believe

 The euro (EURUSD) traded at $1.3709 from $1.3715 late Wednesday. The euro had fallen as low as $1.3648 earlier Thursday, according to FactSet.

 The ICE dollar index (DXY), a gauge of the greenback’s strength against six currencies, fell to 80.041 versus 80.060 late Wednesday. The WSJ Dollar Index , an alternate measure of dollar strength, rose to 72.94 from 72.91.

 The euro-zone economy expanded 0.2% in the first quarter from the fourth quarter, which was less than the 0.4% growth expected by economists. The overall first-quarter result was driven by Germany’s 0.8% growth, countering contractions in Italy and the Netherlands.

 Data also confirmed that annual consumer-price growth in the euro zone was 0.7% in April, well below the European Central Bank’s medium-term inflation target of just under 2%.

 “All adding to expectations that the ECB will act at the June 5th meeting and that the delay in policy action might prove a significant and negative complication to the outlook for the euro zone and [euro],” said Camilla Sutton, chief foreign-exchange strategist at Scotiabank, in a note.

 The euro has been on a downward trend since May 6. Declines have accelerated since ECB President Mario Draghi said on May 8 that he would be “comfortable” taking action at the June meeting, but would first look at the ECB’s updated inflation forecasts. Investors have since focused on remarks from several ECB officials to get a better sense of what stimulus could be provided in June.

 ECB Vice President Vitor Constancio said Thursday the central bank would act “swiftly” to fight low inflation, if necessary, which also had put pressure on the euro.

 The dollar (USDJPY) fell to 101.62 yen from Yen101.86 late Wednesday. In the first quarter, Japan’s seasonally adjusted gross domestic product jumped 5.9% annualized, versus the 0.1% gain in 2013’s fourth quarter.

 Meanwhile, the British pound (GBPUSD) rose to $1.6789 from $1.6769 late Wednesday. The Australian dollar (AUDUSD) fell to 93.41 U.S. cents from 93.79 U.S. cents.

By Saumya Vaishampayan, MarketWatch