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US$ Falls to Weekly Lows Versus Euro, Yen

The U.S. dollar fell across the board on risk assumption, dropping to one-week lows against the Euro and Japanese yen.  The U.S. dollar also tumbled versus the Swiss Franc after KOF Swiss Economic Institute in Zurich said that a monthly gauge that aims to predict the Swiss economy’s direction about six months ahead remained this month at its April level of 2.30, the highest since August 2006.  The Swedish krona gained following a report that showed Sweden’s economy grew for a sixth consecutive quarter.  The New Zealand dollar rose to the highest level in three years against the greenback on speculation China will buy the nation’s assets to diversify the world’s largest holding of foreign reserves.  Meanwhile, consumer spending in the U.S. climbed less than forecast in April as food and fuel prices rose, a sign that faster income gains are necessary to boost the biggest part of the economy.  Purchases rose 0.4% after a revised 0.5% gain the prior month, the Commerce Department reported today.  Later today, pending home sales are expected to decline 1.0% after gaining 5.1% in the month prior. 

The Euro traded to its highest level against the dollar in a week as rising global stock markets increased demand for higher-yielding currencies.  However, economic data released in the region suggests that the Euro could come under increased pressure in the medium-term.  An index of executive and consumer sentiment in the Euro region slid to 105.5 this month from 106.2 in April. At the same time, inflation in Germany, Europe’s largest economy, unexpectedly eased in May after oil prices dropped from a 2 ½ year high.  The harmonized inflation rate fell to 2.4% from 2.7% in April, the Federal Statistics Office said today.  The soft price pressures data may cause the European Central Bank to have the scope to keep their benchmark interest rates near a record low of 1.25% for the remainder of the summer.

The Japanese yen gained against the U.S. dollar but fell against most of its rivals as Japan’s credit outlook was lowered by Fitch Ratings to negative from stable.  The company’s long-term local currency rating for Japan is AA- and long-term foreign currency rating is Aa.  Japan’s government debt is projected to reach 219% of gross domestic product, the Organization for Economic Cooperation and Development said this week. 

The British pound pushed modestly higher versus the U.S. dollar as global equities rose and a report showed improving confidence.  An index of sentiment rose 10 points to –21 in May from the previous month, the highest in five months, the GfK NOP Ltd. said.  A separate report showed house prices increased 0.3% this month, beating economist estimates.  Nevertheless, with national holidays in the United States and the United Kingdom on Monday, expect the GBP/USD pair to hold a tight range as market liquidity thins ahead of the long weekend. 

US$ Falls As Stocks Rise, Stays Lower After Disappointing GDP Data

The U.S. dollar fell across the board, retracing some of its recent losses as global equities rallied overnight.  The greenback fell versus the New Zealand dollar after interest.co.nz reported China Investment Corp. planned to invest in the South Pacific nation’s assets.  The so-called kiwi was also boosted as Finance Minister Bill English said the country aimed to double its export to China within four years.  Australian’s dollar strengthened from a six-week low against the U.S. dollar as a government report showed business investment increased and stock gains boosted demand for higher-yielding assets.  Sweden’s krona gained against both the greenback and the Euro as a report showed consumer and business confidence rose more than economists predicted.  Meanwhile, the U.S. economic docket showed that the economy grew at a 1.8% annual rate in the first quarter, less than forecast, reflecting a smaller gain in consumer spending than previously calculated.  The revised rise in gross domestic product was the same as estimated last month and compared with a 3.1% gain in the prior quarter.  Consumer purchases fell short of forecasts, registering at 2.2% down from 2.7% the previous quarter.  In addition, more Americans unexpectedly filed applications for unemployment benefits last week, a sign the labor market is struggling to gain momentum. 

The Euro rose against the dollar as European Central Bank President Jean-Claude Trichet said policy makers are “carefully” monitoring inflation, fueling bets the economy is strong enough to withstand higher interest rates.  The ECB needs to “avoid commodity-price increases becoming entrenched in longer-term inflation expectations, which could have second round effects on wages and prices,” Trichet said today.  “We are carefully monitoring the situation and we stand ready to do whatever is necessary to fulfill our mandate.”  The ECB raised its benchmark rate to 1.25% last month after keeping it at a record low of 1.0% for almost two years. Also, the Financial Times reported that European Financial Stability Facility Executive Officer Klaus Regling said Asian investors, including China, may buy Portuguese bailout bonds when EFSF sells them in June, easing concern that the region’s sovereign debt crisis will spread.

The Japanese yen maintained its tight range overnight versus the U.S. dollar as higher stocks put pressure on both safe-haven currencies.  However, the Japanese yen has rallied versus the greenback in early trading after a report showed that GDP in the U.S. failed to meet economist’s expectations.  Indeed, U.S. first quarter GDP registered at 1.8% versus an expectation of a 2.2% rise.  

The British pound gained versus the U.S. dollar on risk assumption, but fell against the Euro as an index of sales volumes at U.K. consumer-service companies fell to the lowest since November 2009.  The gauge of consumer-services companies dropped to minus 23 in the three months through May from minus 11 in the quarter through February, the Confederation of British Industry said today.  The pound strengthened against the dollar yesterday as a report showed U.K. exports helped the economy resume growth in the first quarter, outweighing the biggest slump in consumer spending in almost two years. 

US$ Index Trades Near 7-Week High

The U.S. dollar gained modestly against most of its higher-yielding counterparts, including the Euro, on concern that Europe’s leaders will struggle to find a solution to the debt crisis, threatening the region’s economic recovery.  The U.S. Dollar Index approached a seven week high and the greenback traded to its highest level versus the Canadian dollar since March as the price of oil continued to retreat.  The South African rand fell over 1% on speculation a sluggish recovery in Africa’s largest economy will persuade the central bank to keep rates on hold this year.  Reserve Bank Governor Gill Marcus yesterday said the economy’s recovery is “fragile”, and domestic demand poses little risk to inflation.  Meanwhile the economic docket in the United States showed that orders for U.S. durable goods dropped more than forecast in April, reflecting less demand for aircraft and disruptions in supplies of auto parts stemming from the earthquake in Japan.  Bookings for goods fell 3.6%, the most since October, after a 4.4% jump in March, a Commerce Department report showed today in Washington. 

The Euro declined against most of its rivals amid disagreement over how to resolve the sovereign-debt crisis.  European Union Economic and Monetary Affairs Commissioner Olli Rehn told French newspaper Les Echos in an interview that Greek debt maturities could be extended on a voluntary basis.  He also said at a forum in Paris that Greece is the “most difficult case” among the three countries that have received bailouts from the EU and the International Monetary Fund.  The Euro also fell to a fresh all-time low against the Swiss Franc after GfK AG said its German confidence index will fall for a third consecutive month in June.  A drop in confidence in Europe’s largest economy may prompt investors to scale back bets that the European Central Bank will raise interest rates further. 

The Japanese yen continued to hold its tight range from the past week against the U.S. dollar as the currency pair struggles to find a definitive direction.  However, the Japanese currency could come under pressure in the medium-term as the Bank of Japan indicated its willingness to expand lending programs to support reconstruction efforts after the nation’s record March 11 earthquake crippled factory production and pushed the economy into a recession.  “We’re examining whether there’s a way to enhance” a 3 trillion yen lending program for industries that can spur economic growth, Governor Masaaki Shirakawa said in a speech in Tokyo today. 

The British pound strengthened against the U.S. dollar and the Euro as a report showed U.K. exports helped the economy resume growth in the first quarter, outweighing the biggest slump in consumer spending in almost two years.  Gross domestic product expanded 0.5% in the first three months this year, matching an initial estimate.  Exports rose 3.7% in the quarter with the net trade adding 1.7% points to GDP growth.  Consumer spending dropped 0.6%, the most since the second quarter of 2009.  However, as the Conservative U.K. government moves forward with strict austerity measures to cut the nations budget deficit, the British economy will likely stay under pressure.  Indeed, GDP is forecast to expand 1.5% this year, after growing 1.6% last year, according to a survey of economists. 

US$ Rallies Across the Board on Risk Aversion

The U.S. dollar rallied across the board on widespread risk aversion, carrying its bullish momentum from the previous two weeks.  The MSCI Asia Pacific Index of shares slumped 2.2% today, the biggest slide since mid-March, as a Chinese manufacturing gauge fell to a 10-month low.  The preliminary purchasing managers’ index for China dropped to 51.1 in May from a final reading of 51.8 in April.  The Australian dollar, often traded as a proxy for China, fell over 1.0% and other commodity-based currencies came under pressure as the price of oil fell 2.5%.  Overall, the U.S. dollar index climbed to its highest level since April 1 as falling equities and poor global economic data boosted demand for the American currency as a haven.  There is no economic data slated for release this morning, so expect the U.S. dollar to continue its advance as American equity futures foreshadow a lower open.  Tomorrow sees the release of new home sales followed by durable goods orders on Wednesday.  Gross domestic product and weekly jobless claims are set for Thursday morning, followed by personal income, consumer sentiment and pending home sales on Friday morning.

The Euro slumped to the lowest level versus the U.S. dollar since mid-March and to a record low against the Swiss franc amid deepening concern Europe’s sovereign-debt crisis will worsen, reducing the appeal of holding the region’s assets.  Late Friday, S&P cut Italy’s credit-rating outlook to negative from stable, citing slow economic growth and “diminished” prospects for a reduction of government debt.  Fitch ratings also lowered Greece’s long-term debt ranking to B+, four notches below investment grade.  At the same time, Spain’s Socialist party suffered its worst electoral defeat in more than 30 years.  Spanish voters punished Prime Minister Jose Luis Rodriguez Zapatero’s party for soaring unemployment and spending cuts that aimed to shield the nation from Europe’s debt crisis.  The Euro has stayed lower against its major trading partners as the Stoxx Europe 600 index declined 1.5%, diminishing demand for the higher-yielding asset. 

The Japanese yen gained against all of its trading partners, except the U.S. dollar, as the two currencies gained on widespread risk aversion.  Nevertheless, the Japanese currency could become under increased pressure in the coming months after a report last week confirmed that the Japan reentered a recession in the first quarter of 2011.  GDP contracted an annualized 3.7% as the March 11 earthquake and tsunami disrupted production and prompted consumers to cut back spending. 

The British pound slumped against the dollar as falling stock markets boosted demand for safer assets.  However, Britain’s currency reached its strongest level against the Euro in almost two months after Bank of England Chief Economist Spencer Dale said policy makers should increase interest rates even if the U.K. recovery remains uncertain.  Bank of England policy makers will raise borrowing costs once this year, with the key rate ending 2011 at 0.75% according to the median estimate of economists surveyed by Bloomberg.  

US$ Hold Tight Ranges, Gains Versus Euro

The U.S. dollar maintained its tight range from the second half of the week against most of its counterparts, while gaining slightly versus its higher-yielding rivals as global equities ticked lower.  The greenback gained the most against the Euro following dovish comments from Germany’s central bank.  The Canadian dollar dropped after a government report showed inflation slowed in April more than economist forecast, reducing speculation that the Bank of Canada will resume boosting borrowing costs.  With no economic data slated for release today in the U.S. expect the greenback to continue to trade with the prevailing risk sentiment, possibly gaining as U.S. equity futures foreshadow a lower open for American shares.

The Euro weakened versus the U.S. dollar as the German Bundesbank said growth in Europe’s largest economy will probably slow, prompting traders to reduce bets the European Central Bank will increase interest rates.  German growth is “likely to ease somewhat in the foreseeable future,” the Frankfurt-based central bank said in its monthly bulletin published today.  Germany’s Economy Ministry sees growth of 2.6% this year.  Europe’s common currency has climbed 6.5% against the dollar this year as the European Central Bank raised rates, while the U.S. Federal Reserve has left their benchmark rates at almost zero.  

The Japanese yen weakened modestly versus the U.S. dollar as the Bank of Japan maintained monetary stimulus to support an economy in recession after a record earthquake.  Japan’s currency is set for a weekly loss against all of its major counterparts as BoJ Governor Masaaki Shirakawa and his colleagues decided to keep a 30-trillion yen credit program and a 10 trillion yen asset-purchase fund that represent the bank’s main policy tools.  The decision to hold current policy comes after a report yesterday that showed Japan’s gross domestic product contracted an annualized 3.7% in the three first quarter after a magnitude-9 earthquake and a deadly tsunami disrupted supply lines and caused factories to shut. 

The British pound opened this morning unchanged from yesterday’s close against the U.S. dollar as the pair has maintained a tight range over the past few weeks.  The pound has fluctuated between gains and losses versus the greenback as investors speculated on when the Bank of England will raise borrowing costs from a record low of 0.5%.  The central bank has held rates even as the fastest inflation in more than two years squeezes household finances.  Consumer prices rose an annual 4.5% in April, the fastest since October 2008.

US$ Holds Recent Gains Ahead of Fed Minutes

The U.S. dollar continued to trade in favorable ranges versus most of its counterparts even as stocks and commodities rose on speculation the global recovery will be sustained.  The greenback gained against the British pound as minutes of the Bank of England’s may 5^th meeting showed most policy makers said higher interest rates might hurt the recovery.  Sweden’s krona advanced as the National Budget Office reported that the nation will have a larger budget surplus than previously forecast.    Meanwhile, the economic docket showed that mortgage applications in the U.S. increased last week to the highest level since December as cheaper borrowing costs made refinancing more attractive.  Applications rose 7.8% in the week ended May 13^th.  With no other data slated for release today, traders will shift their focus to the Federal Reserve’s FOMC meeting minutes for clues for future interest rate policy.  With no surprises expected from the minutes, the U.S. dollar could remain range bound throughout our trading session. 

The Euro remained near its lows of recent trading even as global equities rose, increasing the demand for higher-yielding assets.  European Central Bank officials ruled out a Greek debt restructuring, clashing with political leaders over a solution to the sovereign financial crisis.  “A Greek debt restructuring is not the appropriate way forward – it would create a catastrophe” because it would damage the banking system, ECB Executive Board member Juergen Stark said today.  Fellow board member Lorenzo Bini Smaghi said in Milan “a solution for reducing debt but not paying for it will not work.”  As the European debt crisis continues to dominate trade, expect the Euro to remain weak versus the U.S. dollar. 

The Japanese yen retraced some of its losses from yesterday overnight but remains near 2-week lows versus the U.S. dollar.  The yen could see modest selling pressure throughout our trading session ahead of a report tomorrow forecast to show Japan’s economy contracted in the first quarter.  GDP from the first three quarters of the year is expected to shrink 1.9% after contracting 1.3% in the previous quarter.  The report may bolster bets the Bank of Japan will trail its counterparts in normalizing monetary policy. 

The British pound fell as minutes from the Bank of England’s last meeting showed the majority of policy makers warned against raising borrowing costs, and a report revealed unemployment claims rose.  The Monetary Policy Committee voted 6-3 to hold interest rates at 0.5% as members said an increase “could adversely affect consumer confidence.”  The Sterling stayed lower after a report showed U.K. unemployment claims rose in April at the fastest pace since January 2010.  Jobless benefit claims increased by 12,400 from March to 1.47 million, the Office for National Statistics said today in London.   

US$ Rallies Versus Yen as State of Japanese Economy is "Severe"

The U.S. dollar held a largely flat range against most of its counterparts overnight as the greenback continues to consolidate near its recent highs.  However, the U.S. dollar rallied over 1.0% against the Japanese yen after Bank of Japan Governor Masaaki Shirakawa said the economy is in a “very severe” state, fueling bets monetary policy for the island nation could be eased further.  Today’s economic docket showed that housing starts in the U.S. unexpectedly fell in April as home builders continued to struggle almost two years into the economic recovery.  Workers began on 253K houses at an annual pace, down 11% from the prior month.  Later this morning, industrial production in the U.S. is expected to climb for a six consecutive month.  Production at factories, mines and utilities is expected to increase 0.4% after growing 0.8% in March. 

The Euro gained modestly for the second day against the U.S. currency as European finance officials meeting in Brussels endorsed a bailout for Portugal, boosting confidence that the region’s debt crisis will be contained.  Luxembourg’s Jean Claude-Juncker, who leads the group of Euro zone finance ministers, said that the first traunch of Portugal’s aid package is due by the end of May and a treaty on the European Stability Mechanism will be signed in June.  Ministers for the first time also floated the idea of talks with bondholders over extending Greece’s repayment schedule.  Europe would consider “reprofiling” Greek bond maturities as part of a package including stepped-up sales of state assets and deeper spending cuts, Junker said.  The Euro gained as investors perceived the statement as proactive. 

The Japanese yen fell against all of its 16 most-actively traded counterparts as the island nation’s central bank head said the economy is in a “very severe” state.  Bank of Japan Governor Shirakawa told lawmakers in Tokyo today that Japan’s economy has been a severe situation since the March 11^th earthquake and the central bank is committed to ending deflation.  Meanwhile, a statement released by Prime Minister Naoto Kan’s cabinet said that the government hopes for “flexible” action by the bank to support the economy and will also closely watch the currency.  The bearish comments have led investors to shed the safe-haven currency. 

The British pound rose against the U.S. dollar as a report showed inflation accelerated more than forecast in April and reached the fastest pace since 2008, bolstering the case for higher interest rates.  U.K. consumer prices gained 4.5% last month from a year earlier, the Office for National Statistics said today.  The median forecast of economist was 4.1%.  Bank of England Governor Mervyn King said the recent surge in inflation is being driven by higher sales taxes and increased energy and import prices.  Nevertheless, the BoE left its key rate unchanged at 0.5% on May 5^th as policymakers prioritized growth over taming inflation. 

US$ Falls Versus Euro on Strong Euroepan Growth Data

The U.S. dollar traded in mostly flat ranges overnight, but fell versus the Euro as a report showed the 17-nation’s economic growth accelerated to the fastest pace since the second quarter of 2010.  However, there is a slew of event risk scheduled for Friday that could spur a bullish reaction in the reserve currency as growth and inflation in the world’s largest economy gathers pace.  The cost of living in the U.S. rose in April, led by increases in food and fuel costs that are starting to filter down to other goods and services.  The consumer price index increased 0.4%, matching the median forecast of economists surveyed by Bloomberg News. The print follows a 0.5% the month advance in March, figures from the Labor Department showed this morning.  Later, the University of Michigan Confidence report is expected to register 70.0 in April, up from 69.8 in March.

The common currency climbed versus nearly all of its most traded peers, as positive growth data bolstered the case for further central bank interest rate increases.  Gross domestic product in the Euro zone rose 0.8% from the fourth quarter, powered by forecast topping expansion in Germany and France.  Indeed, German GDP jumped 1.5% from the previous three months and the French economy grew 1.0%, exceeding economists’ median estimates of 0.9% and 0.6%, respectively.  Expansion and surging prices in the region are putting pressure on the European Central Bank to raise rates, even as concern escalates that Greece may need extra aid to avoid debt restructuring.  Investors expect the ECB will raise its target rate by 92 basis points over the next 12 months, a Credit Suisse Group AG index shows.  That’s up from 71 basis points of tightening predicted on May 9^th.

The Japanese yen strengthened against most of its counterparts, but held steady against the U.S. dollar, after a bombing in Pakistan killed at least 73 people, boosting demand for Japan’s currency as a refuge.  Bombers today targeted 15 buses carrying newly graduated member of Pakistan’s Frontier Constabulary, a parliamentary force, who were going home after a May 11^th ceremony.  The Tehreek-e-Taliban group said it carried out the attacks a first act of revenge for Osama bin Laden’s death, Pakistan’s Dunya TV reported.  Nevertheless, expect the JPY/USD pair to continue to hold tight ranges as the two ebb and flow with the prevailing risk appetite.

The British pound weakened after a report by the Institute for Fiscal Studies said U.K. living standards will fall, spurring bets that monetary policy tightening by the Bank of England will lag behind that of the euro region.  Living standards will decline as inflation outstrips income growth and government spending cuts crimp welfare payments, the report said.  U.K consumer earnings fell 3.8% in real terms in the 11 months through February after growing through the recession of the previous two years.  Prime Minister David Cameron’s government is trying to reduce a deficit running about 10.0% of GDP through March by raising taxes and implementing public spending cuts that are the deepest since World War II.  

US$ Continues to Rally as Global Stocks Tick Lower

The U.S. dollar continued its rally overnight, gaining against nearly all of its major counterparts as widespread risk aversion buoyed the greenback.  Asian equities fell after China raised bank’s reserve requirements for the fifth time this year to restrain prices, adding to the likelihood that growth will slow in the world’s second-biggest economy. The Stoxx European 600 index slid over 1.0% on bets Greece may have to restructure debt.    The greenback gained the most versus the Australian dollar as investors trimmed bets on central-bank increases after employment dropped by the most since 2009.  The dollar also saw a boost versus other commodity currencies as oil declined after the International Energy Agency lowered its 2011 global oil demand forecast for the first time as this year’s price rally begins to weigh on consumption.  As a result, the Dollar Index, which tracks the greenback against the currencies of six major U.S. trading partners, climbed to the highest level in three weeks.  Meanwhile, the economic docket showed that wholesale costs in the U.S. rose more than forecast in April, led by higher prices in food and fuel.  The 0.8% increase in the producer-price index compares with the 0.6% median estimate of economists, Labor Department figures showed today.  Also, sales at U.S. retailers rose in April, reflecting gains at service stations and grocery stores.  The 0.5% increase was the smallest since July and followed a 0.9% March gain, according to the Commerce Department. Weekly jobless claims registered largely inline with expectations.

The Euro slid to a 5-week low against the U.S. dollar as European Union Economic and Monetary Affairs Commissioner Olli Rehn said a Greek debt restructuring would have “devastating implications.”  Officials from the EU, European Central Bank and the International Monetary Fund yesterday began their fourth evaluation of Greece’s economy.  Rehn said the delegation will need “a few weeks” to determine Greece’s financing needs and the potential size of any new aid package.  With U.S. equities pointing towards a lower open, the common currency could see continued selling pressure throughout our trading session. 

The Japanese yen strengthened against all of its most-traded peers as investors sought the safety of the Japanese currency amid slumping equities and commodity prices.  Asian equities came under downward pressure after the People’s Bank of China said that the reserve ratios for its lenders will increase by 0.5% on May 18^th.  There was no major economic data released for the island nation today.

The British pound fell against the dollar after a report showed manufacturing rose less than estimated, giving the Bank of England leeway to hold its main interest rate at a record low to spur growth.  Manufacturing output rose 0.2% in March from the month before, the Office for National Statistics said today.  The print missed estimates for a 0.3% increase.  A separate survey showed industrial production gained 0.3% from February, below the 0.8% forecast. 

US$ Falls Versus Pound on Higher U.K. Inflation Projections

The U.S. dollar traded in a mixed direction overnight, testing new dollar highs of recent ranges versus the Euro on deepening concern surrounding the Greek debt crisis.  However, the greenback fell against the British pound as the Bank of England said U.K. inflation may reach 5.0% this year.  The greenback remains in unfavorable ranges against the commodity-based currencies even as the price of gold and oil slipped overnight.  Meanwhile, mortgage applications in the U.S. rose last week to their highest level in more than a month as declining borrowing costs spurred purchases and refinancing.  The index increased 8.2% in the period ended May 6, the Mortgage Bankers Association reported today.  With a light economic docket and U.S. equity futures pointing towards a flat open, the U.S. dollar could maintain current ranges as market participants await U.S. unemployment data on Friday morning. 

The Euro slipped against the majority of its peers on speculation European leaders are slowing the drive to grant Greece additional aid, fueling concern the nation may be forced to restructure its debt.  German Chancellor Merkel yesterday said Greece needs to stay the course on budget cuts to deserve an extension of the 110 billion euro lifeline granted last year.  A new aid package would feature a rate reduction for Greek loans and an extension of debt maturities, plus extra funds, two officials involved in talks said under condition of anonymity.  At the same time, Greek unions held their second general walkout this year, grounding flights and shutting hospitals and schools in protest against deficit reductions.  Meanwhile, Finland may insist Portugal’s rescue include terms that force investors to share losses, Kimmo Sasi, who heads the Finnish parliament’s working group on bailout talks, said in an interview today.  Portugal became the third euro member to get aid as Europe’s sovereign debt crisis spread beyond Greece and Ireland. 

The Japanese yen slid modestly versus most of its counterparts as European stocks rose, sapping demand for the safe-haven currency.  Asian equities also tipped higher following strong economic data released in China, the world’s second largest economy.  Separate reports showed China’s industrial production advanced 13.4% last month and retail sales grew 17.1%.  Nevertheless, the yen remains within one percent of its highs following the Group of 7 multilateral intervention in mid-March. 

The British pound gained versus the dollar and the euro after the Bank of England said it sees inflation “markedly higher” in the near term, boosting speculation that borrowing costs will rise from record levels.  “There is a good chance that inflation will reach 5 percent later this year and it is more likely than not to remain above the 2 percent target throughout 2012,” the bank said in its inflation report today.  Risks to economic growth are “skewed to the downside.”  The central bank said it still expects inflation to ease back toward its 2% goal by 2013.  A separate report today showed Britain’s trade deficit widened more than estimated in March as exports to countries outside the European Union fell.