Euro Falls On Poor German Data

The euro was steady at $1.3590 at 8:15 GMT on Monday morning after losing ground to the dollar last week as the two nations’ central banks move in opposite directions. The common currency is struggling as the eurozone’s sputtering recovery may force the European Central Bank to ease further at a time when other central banks are tightening.

 

The dollar has been on the rise since last week when non-farm payrolls data beat forecasts and the nation’s unemployment rate unexpectedly fell. The report, out last week on Thursday, showed that US employers added 288,000 new jobs in June confirming that the US recovery was on solid ground. A separate report showed that unemployment fell to 6.1 percent in June, a sign that the labor market is picking up.

 

The data has many speculating that the US Federal Reserve could raise its interest rates sooner than expected. Although the bank has given no indication about its timeline for a rate hike, most expect to see rates rise in June next year. This week the bank is set to release the minutes from its June policy meeting, something investors hope will provide some insight into the bank’s plans for the future.

 

Meanwhile the European Central Bank is moving in the opposite direction as the bank tries to sure up the region’s struggling economies. Reuters reported that Germany’s industrial output was down 1.8 percent in May, the nation’s largest drop in over two years. The figure is concerning as Germany tends to be the steam engine of the eurozone, often making up for other nations with poor performance. The report has added to growing speculation that the ECB may be forced to ease further in the coming months in order to avoid any further drops in inflation. 

Posted In: NewsEurozoneCommoditiesForexGlobalFederal ReserveMarketsEuropean Central BankFederal Reserve
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