US dollar stable against euro, yen amid grim data

The US dollar was largely stable against the euro and yen Wednesday as more bearish news on the faltering US and European economies surfaced. With markets anticipating an interest rate cut by the European Central Bank on Thursday, the euro fell slightly to 1.2704 dollars around 2200 GMT from 1.2710 dollars in New York on Tuesday. The single European currency was also marginally down to 118.55 yen from 118.57 yen on Tuesday while the dollar firmed to 93.29 yen from 93.27 yen. The foreign exchange market absorbed an array of depressing US and European economic data, dealers and analysts said. "As it appears, many market participants have and continue to price in negative US data, as evident today with the release of additional poor US economic data," said Jeff Placido of PNC Bank. The ADP National Employment Report showed Wednesday that the US private sector lost 250,000 jobs last month, the largest decline in six years. Separately, labor consultancy Challenger, Gray & Christmas said layoffs announced by American employers in November rose to 181,671 as job cuts for the year officially surpassed one million for the first time since 2005. Service sector activity also fell to the lowest level in November in at least a decade, according to another report. But investors latched onto positive news including a survey from the US Mortgage Bankers Association showing surprisingly strong demand for home loans. Another day of grim economic data from Europe also kept the euro and the British pound down. It emerged on Wednesday that services activity in the nations sharing the euro retreated faster than expected in November, according to a survey which analysts said increased the chances of a big ECB rate cut. The European Central Bank (ECB) was almost certain to deliver the third eurozone interest rate cut in less than two months on Thursday, analysts said. With the eurozone in recession and inflation falling sharply across the 15-nation bloc, the ECB was widely expected to slash its main interest rate from 3.25 percent on Thursday with the only question being by how much. The pound dropped to 1.4769 dollars in New York trading on Wednesday from 1.4906 a day earlier. The outlook for the British currency looks dim as the Bank of England is widely anticipated to follow up their October 8 and November 6 rate cuts with yet another "aggressive reduction" on Thursday, said Terri Belkas, currency strategist of Forex Capital Management. "Currently, the markets are betting on a 100 basis points cut to 2.00 percent, which would bring the Bank rate to its lowest level since 1939," she said. "However, the BOE's subsequent monetary policy statement will be just as important, as it will provide a gauge as to what the central bank will do next, and may determine the British pound's next move." In late New York trade, the dollar rose to 1.2103 Swiss francs from 1.2063 Swiss francs on Tuesday.