Euro heads towards one-month low as sentiment sours

Wednesday,   24-Apr-2019   04:40 PM (IST)

The euro fell towards a one-month low on Wednesday as the contrast between solid economic data in the United States and souring confidence measures in the euro zone kept the dollar supported near 22-month highs. Australia’s dollar was the biggest mover among the major currencies, dropping one percent after weaker-than-expected inflation numbers heightened the prospect of an interest rate cut. Deteriorating German business morale, after a business climate index for April came in below forecasts, was the latest signal that economic performance in the euro zone is relatively weak. The greenback, by contrast, was propelled higher by strong U.S. housing data on Tuesday - the latest signal the American economy is outperforming rivals, encouraging investors to snap up the dollar in recent weeks. The dollar index, which measures the U.S. currency versus a basket of six major rivals, stood at 97.622 after rising to 97.777 overnight, its highest since June 2017. The euro weakened 0.2 percent to $1.1211, but held above its early April low of $1.1183. The weakness in the euro allowed the Swiss franc to strengthen from six-month lows marked on Tuesday. The franc has been hit hard as investors dumped safe-haven currencies during this year’s rally in risk assets. It had recovered 0.3 percent to $1.1416 francs by 1045 GMT. The Aussie fell to a 1-1/2 month low of $0.7027. The Canadian dollar shed 0.3 percent to C$1.3461 and a six-week low despite the recent rise in oil prices as investors bet the Bank of Canada would stick to its dovish policy stance when it meets later on Wednesday. Sterling extended recent losses to hit another two-month low of $1.2915, as pressure grows on British Prime Minister Theresa May to come up with a Brexit plan amid stalled negotiations with the opposition Labour party. The yen was unchanged at 111.86 against the dollar.