The euro extended gains against the U.S. dollar on Tuesday, boosted by strong economic sentiment data from Germany after European Central Bank President Mario Draghi signaled on Monday the possibility for further easing measures. In a report, the ZEW Centre for Economic Research said that its index of German economic sentiment rose by 15.1 points to a four-month high of 11.5 this month from October’s reading of minus 3.6. In addition, the index of euro zone economic sentiment increased to 11.0 in October from 4.1 in September, above expectations for an increase to 4.3. In testimony to the European Parliament Mr. Draghi said the central bank could expand its asset purchase program to include government bonds.
The pound edged higher against the U.S. dollar on Tuesday, data showed that U.K. inflation rose unexpectedly last month, although the greenback remained supported by a rise in safe-haven demand. In a report, the U.K. Office for National Statistics said the rate of consumer price inflation accelerated to a seasonally adjusted 1.3% last month from 1.2% in September. Analysts had expected U.K. CPI to hold steady at 1.2% in October. Month over month, consumer price inflation inched up 0.1% in October in line with expectations, and after holding flat in September.
The U.S. dollar was steady near seven-year peaks against the yen on Tuesday after Japanese Prime Minister Shinzo Abe called snap elections and delayed a planned sales tax hike a day after data showing the economy fell back into recession in the last quarter. He also announced a fresh package of tax and spending measures designed to bolster growth in the short term. The announcement came one day after data showed that Japan’s economy unexpectedly contracted by an annualized 1.6% in the third quarter, after a 7.3% contraction in the previous quarter. Investors were looking ahead to the Bank of Japan’s policy statement today after the central bank surprised markets by expanding its asset purchasing stimulus program last month.
