LONDON (SHARECAST) - The euro marked decent gains against the dollar on Wednesday on strong hopes that the European Central Bank will announce measures to combat the Eurozone financial crisis.
Investors are expecting the ECB to outline a bond-buying programme of up to three years maturity, in countries like Spain and Italy to help lower borrowing costs at its meeting on Thursday.
The euro's advance was give a boost after Bloomberg reported that the ECB may buy an unlimited amount of government bonds from nations like Spain and Italy.
The euro advanced to an intra-day high of $1.2624 before settling at around $1.2596 versus $1.2568 the previous session.
Meanwhile European economic data provided grim reading on Wednesday after the Markit euro-zone composite purchasing-managers’ index, or PMI, revealed private-sector activity slowed in August. The PMI fell to 46.3 last month from 46.5 in July after a preliminary reading of 46.6.
In US economic data, non-farm labour productivity rose at an annual rate of 2.2% in the second quarter, higher than estimates of 1.8% growth.
The ICE dollar index, which measures the US dollar against a trade basket of six other currencies, slipped to 81.253 from 81.328 in late US trading on Tuesday.
Against the Japanese yen, the dollar remained steady at ¥78.40 yen. The Australian dollar skidded to an eight-week low against the US dollar on expectations that the Reserve Bank of Australia will slash interest rates in the wake of poor economic data.
Sterling rose against the dollar to buy $1.5906 compared to $1.5876 on Tuesday.