Euro climbs against CYP, eases on dollar

The euro continued its steady advance against the Cyprus pound, gaining to a new high of 0.5756 or 1.7373, but was well off its highs against a generally stronger dollar, which climbed after core US inflation numbers came in much higher than expected.

A general slowdown in tourism receipts and a reduction in the pace of euro borrowing by residents was seen as the main factors driving the euro higher against the Cyprus pound. Since the start of the year, the euro has been steadily climbing from levels of around 0.5720 or 1.7483 to the current level of 0.5756 or 1.7373.

The Cyprus pound was last trading at 0.4765 or $2.0987 against a generally stronger dollar, which reversed earlier losses to trade at $1.2085 against the euro, after core PPI rose more than expected,

strengthening market expectations that the Federal Reserve may not be done raising interest rates.

Core U.S. producer prices grew 0.3% last month, pushing the 12-month change in the index up to a gain of 1.7%, from an increase of 1.5% in the year to January. Markets were expecting core prices to rise just 0.1%.

Headline producer prices, however, dropped an unexpectedly steep 1.4%, the sharpest decline in nearly three years, led by a fall in energy and food costs. Wall Street economists had predicted a decrease of 0.2%.

The dollar had initially sold off on the much steeper fall in the headline PPI number, but soon recovered as markets digested the report.

The dollar to JPY 117.25 against the yen and was last trading at CHF 1.3035 against the Swiss franc, while sterling was last trading at $1.7455.