Euro Avoidance Boosts Dollar --- Poland Weighs In on Zloty's Fate; Mexican Peso Rallies
The dollar was modestly stronger against the euro Wednesday, first on general risk aversion following a raft of disappointing data and then on cautiousness ahead of the European Central Bank meeting.</br></br>Discouraging data overnight helped to erode market confidence, setting a risk-averse tone that typically favors the dollar. When a glimmer of improvement in a U.S. manufacturing report helped to lift U.S. stocks, though, the euro remained down with traders unwilling to take new bets ahead of a euro-zone monetary-policy meeting Thursday.</br></br>Analysts widely expect a half-percentage-point cut to the ECB's key rate to 1%, while some predict new nontraditional easing measures. "The risks are that the ECB is going to move more slowly than the market is expecting, and that will be euro-constructive," said Ron Leven, a currency strategist at Morgan Stanley in New York.</br></br>Meanwhile, the dollar weakened against the yen, one day after sharp gains associated with the close of the fiscal year in Japan. Mr. Leven said the reversal of that move Wednesday may indicate a seasonal trend as investors re-enter the market.</br></br>Wednesday afternoon in New York, the euro was at $1.3232 from $1.3286 late Tuesday, and the dollar was at 98.67 yen from 98.95 yen. The euro was at 130.56 yen from 131.47. The U.K. pound was at $1.4438 from $1.4383, while the dollar was at 1.1460 Swiss francs from 1.1383 francs.