LONDON (AFX) - The euro was softer in early trade as the continued to defy gravity in the face of yesterday's U.S. figures showing the first drop in productivity in six years, dealers said.
Dealers said that whatever bad news came out of the U.S, the euro failed to gain ground against the dollar.
4cast currency strategist Chris Furness said the view that the European Central Bank would not cut rates tomorrow was weighing on the single currency.
"While some people are starting to say the ECB has been right to keep rates on hold, we're not of that view, and its refusal to budge is not helping the euro," he said.
Dealers said market participants will take an interest in German industrial production figures even if they are not expected to influence the ECB's decision on Thursday.
They noted European Central Bank president Wim Duisenberg's statement in New York yesterday that monetary policy can make its best contribution to overall stability by focusing on the maintenance of price stability.
In the UK, the market is expecting the Bank of England's monetary policy committee to cut rates by at least 25 basis points tomorrow at the end of its two-day meeting.
Dealers said the naming of June 7 as election day came as no surprise, adding that chancellor of the exchequer Gordon Brown's campaign speech this morning provided no surprises.