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| Euro comes off six-month lows after weak US data |
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Time is GMT + 8 hours
Posted: 20-Aug-2008 05:33 hrs |
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| US dollar and euro bank notes. The euro rebounded from six-month lows against the dollar after a spike in inflation and weak US housing market figures stoked fresh concerns about the US economy. |
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The euro rebounded from six-month lows against the dollar after a spike in inflation and weak US housing market figures stoked fresh concerns about the US economy.. Dealers said news that US housing starts fell 11 percent to a 17-year low in July roiled an already nervous market grappling with the prospect that the banking system still has more pain to take from the subprime home loan crisis.. Another blow came from an unexpectedly strong annualized 9.8 percent spike in July wholesale prices to a 27-year high, which undercut hopes that the worst of the subprime crisis was over and that the US economy might be stabilising.. The euro in turn was helped by a downbeat but much better-than-expected ZEW investor confidence survey in Germany, whose economy contracted 0.5 percent in the second quarter.. The ZEW research institute said its index of economic sentiment stood at minus 55.5 points, up 8.4 points from July when the survey hit its lowest level since its creation in December 1991.. The euro was at 1.4783 dollars around 2100 GMT, sharply higher than 1.4696 dollars in New York late Monday. Earlier Tuesday the European single currency sank to 1.4631 dollars, its lowest level since February,. Against the Japanese currency, the dollar slipped to 109.67 yen from 110.09.. "First, the dollar started to carve out a bottom last March and has occurred even as the news flow and financial events over here have remained downbeat, but the reason for the rebound in the greenback is that economic conditions overseas are deteriorating across a broad front," said David Rosenberg, economist at Merrill Lynch.. Capital Economics analyst Jennifer McKeown said German data buoyed the euro.. "The pick-up in the German ZEW index in August shows that investors' expectations for the economy have improved but this is little consolation given the still low level of the index," said. Traders showed little reaction to a decision by the Bank of Japan to leave its key interest rate on hold at 0.50 percent as it downgraded its assessment of Asia's largest economy, predicting continued "sluggish" growth.. "The grimmer view may prompt some players to start speculating (about) a higher possibility of a rate cut down the road," said Tohru Sasaki, chief foreign-exchange strategist at JP Morgan Chase in Tokyo.. "But because interest rate differentials (between countries) are not a trading factor right now, such speculation would have little impact.". In late New York trade, the dollar stood at 1.0914 Swiss francs, down from 1.0972.. The pound was at 1.8676 dollars, up from 1.8650. — AFP
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