Euro reverses slide in front of ECB meeting

The euro(CME:ECm14) rose against most of its 16 major counterparts after German consumer-price inflation slowed less than some traders anticipated before the European Central Bank meets next week.

The 18-nation currency fell earlier to a one-month low against the dollar as inflation slowed in three German states and prices unexpectedly declined in Spain, fueling bets the ECB might boost stimulus. The Australian dollar headed for its biggest weekly gain in almost two months as Chinese Premier Li Keqiang said he’s confident growth will be in a “reasonable range.” The yen sank versus all 31 major peers.

“The market has been sensitive to weak European inflation data, but at the end of the day it is not enough to keep market players short euros,” said Michael Woolfolk, a global-markets strategist at Bank of New York Mellon in New York. Short positions are bets a currency will decrease in value.

The euro was little changed at $1.3745 at 11:26 a.m. New York time after falling 0.3 percent earlier to $1.3705, the lowest since Feb. 28, and gaining 0.2 percent. Europe’s tender has declined for a second week, losing 0.4 percent. It has depreciated 0.4 percent this month.

The common currency rose 0.7 percent to 141.43 yen. It has gained 0.3 percent this week and 0.7 percent in March. The Japanese currency fell 0.7 percent to 102.89 per dollar. The yen has depreciated for two weeks against the greenback and has fallen 1.1 percent this month.

Volatility Falls

Deutsche Bank AG’s Currency Volatility Index, based on three-month implied volatility on nine major currency pairs, declined for the first time in four days. It was at 7.38 percent, from 7.51 percent yesterday. The gauge fell on March 24 to 7.02 percent, the lowest since December 2012. The average over the past year is 8.56 percent.

The Bloomberg Dollar Spot Index rose 0.1 percent to 1,016.60 after government data showed U.S. consumer spending in February increased as incomes picked up. A measure of U.S. consumer sentiment fell in March to the lowest in four months. The Thomson Reuters/University of Michigan final index of sentiment declined to 80, from 81.6 a month earlier.

The euro erased losses against the dollar after data showed German inflation, calculated using a harmonized European Union method, was 0.9 percent this month from a year earlier, versus 1 percent in February, according to the Federal Statistics Office. That was in line with the median forecast in a Bloomberg News survey. Prices increased 0.3 percent from the previous month, less than economists predicted. Eurostat, the EU’s statistics office, releases euro-area inflation data March 31.

Spanish prices fell 0.2 percent from a year ago, the first decline since October 2009, the National Statistics Institute INE said earlier.

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