* Currency falls on weak Spanish, German inflation numbers
* German govt bond yields hit multi-week lows
* Dollar strengthens as Fed policymaker backs rate hikes
* Graphic: World FX rates in 2017 tmsnrt.rs/2egbfVh
(Adds U.S. GDP data)
By Abhinav Ramnarayan
LONDON, March 30 The euro dipped and bond yields
hit multi-week lows on Thursday as easing inflation in Spain and
Germany led investors to row back further on expectations of
when the European Central Bank might tighten monetary policy.
The single currency dipped 0.3 percent against the
dollar and the yield on Germany's 10-year government bond
, the benchmark security for the region, hit a
Signs of economic strength and strong inflation data - and
an acknowledgement of these factors by policymakers - fuelled
talk that the ECB might soon switch out of stimulus mode and
follow the U.S. Federal Reserve, which has embarked on a rate
But annual consumer inflation in Spain eased to 2.1 percent
in March, missing Reuters poll forecasts of 2.7 percent, and
German inflation was weaker than expected at 1.5 percent.
"The Spanish numbers (are) pretty weak ... and German
regional numbers have also seen a fair bit of slowing ... I
suspect that's another reason you have a weakening euro," said
Investec economist Ryan Djajasaputra.
On Wednesday, six sources in and close to the ECB governing
council told Reuters euro zone policymakers were keen to
reassure investors that their easy money policy was far from
Prior to that report, money markets were pricing in the
possibility of an ECB rate hike in December and fully pricing
one in for next March. Both were seen as less likely on
The euro may have also come under pressure after British
Prime Minister Theresa May formally began Britain's exit from
the European Union on Wednesday, launching a two-year
negotiation process before the divorce comes into effect.
Oil prices, up on disruptions in Libya, helped push European
blue chip stocks a touch higher. The broader Euro STOXX
600 rose 0.11 percent.
U.S. stock futures were pointing towards a subdued open
ahead of speeches by Fed policymakers.
South Africa's rand recouped some losses on Thursday from a
three-day dive as the future of the country's finance minister
Reassurance overnight from U.S. policymakers went some way
towards bolstering faith in the economic and policy direction of
the world's richest country, giving support to the dollar.
There was further positive news with final U.S. economic
output data showing that economic growth slowed less than
previously reported in the fourth quarter amid robust consumer
spending that was partially met with a rise in imports.
The greenback rose 0.2 percent against a basket of six major
currencies and was up 0.3 percent against the yen, coming firmly
off four-month lows hit against the Japanese currency earlier
It fell last week after the failure of President Donald
Trump's U.S. healthcare reform bill brought the "Trumpflation"
trade into doubt.
Chicago Federal Reserve President Charles Evans, a voter on
the policy-setting Federal Open Market Committee, said on
Wednesday he supported further interest rate hikes this year
given progress on the Fed's goals of full employment and stable
Federal Reserve members Loretta Mester, Robert Kaplan and
John Williams are due to speak on Thursday.
(Editing by Tom Heneghan)