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Euro loses early gains against dollar

Euro loses early gains against dollar

The euro lost most of its early gains against the dollar Wednesday, as U.S. investors were spooked by data showing Chinese exports plunged by a massive 25.7 percent in February from a year earlier.
Weak economic data often encourages investors to repatriate capital into the U.S., boosting the value of the dollar as a safe haven.
The 16-nation euro bought $1.2647 in European morning trading, still higher than $1.2637 late Tuesday in New York but well below daily highs of $1.2736 touched earlier Wednesday.
The Chinese data reminded markets how dependent export-oriented economies, such as China and Japan, are on consumer-driven countries like the U.S., and that they are unlikely to help boost global growth this year. Japan this week posted its first trade deficit in 13 years.
The euro had gained some traction on Tuesday after Axel Weber, European Central Bank governing council member and Bundesbank president, said he would like the euro area's main interest rate to be cut no further than to 1 percent.
Weber said his personal view is that the ECB could cut rates again from the current 1.5 percent, but not by much.
Higher interest rates can support a currency, as investors move funds where they earn higher returns.
In other trading, the British pound was flat, at $1.3722 compared with $1.3723 in New York Tuesday, while the dollar bought 98.61 Japanese yen, down slightly from 98.85 late Tuesday.


Updated : 2021-06-16 21:39 GMT+08:00