NEW YORK: The euro declined on Wednesday after a report that European Central Bank (ECB) President Christine Lagarde planned to step down early, while the dollar extended gains following a batch of economic data and ahead of the minutes from the Federal Reserve’s January meeting.
The Financial Times reported Lagarde plans to leave her job early, ahead of next year’s French presidential election, to give outgoing French leader Emmanuel Macron a say in picking her successor.
However, the ECB said that Lagarde had not yet made a decision on the end of her term.
The dollar strengthened after a flurry of US economic data was stronger than anticipated. The Commerce Department said non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending, rose 0.6 percent, above the 0.4 percent forecast of economists polled by Reuters, after an upwardly revised 0.8 percent increase in November.
In addition, the Federal Reserve said manufacturing output rose 0.6 percent last month, the largest gain since February 2025, after being unchanged in December, topping the 0.4 percent estimate.
“The manufacturing renaissance could be beginning in earnest. Not only did manufacturing employment increase in January, output also increased,” said Brian Jacobsen, chief economist at Annex Wealth Management in Menomonee Falls, Wisconsin.
“With a growing pipeline of new orders, this could be more than just another head-fake.”
The dollar index, which measures the greenback against a basket of currencies, rose 0.33 percent to 97.45, with the euro down 0.31 percent at USD1.1816.
The greenback was on track for its third straight advance and biggest daily percentage gain since February 5. Sterling weakened 0.21 percent to USD1.3536 after official figures showed Britain’s annual rate of consumer price inflation fell to 3.0 percent in January, in line with the estimate of economists polled by Reuters, from 3.4 percent in December.
Investors were looking ahead to the Fed’s minutes from its January meeting for signs on the path of interest rates and any commentary about the impact of AI on the economy, especially worker productivity and labor markets. Concerns about disruption from AI have rattled various sectors, notably software names, in equity markets in recent weeks. Markets are not pricing in more than a 50 percent chance of a cut of at least 25 basis points from the Fed until its June meeting, according to CME’s FedWatch Tool, the first after current Chair Jerome Powell’s term ends. Focus also remains on geopolitics, with Iran and the US reaching an understanding on the main “guiding principles” in a second round of indirect talks over their nuclear dispute on Tuesday, although a deal is not imminent, Iranian Foreign Minister Abbas Araqchi said.
Against the Japanese yen, the dollar strengthened 0.72 percent to 154.39. The Trump administration announced three projects valued at USD36 billion to be financed by Japan, the first of some USD550 billion in projects Tokyo agreed to undertake in order to lower US tariffs.
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