The dollar accelerated versus the euro on bets the U.S. may sail through the global economic slowdown unscathed, as most countries in Europe reported economic distress.
The U.S. currency gained 0.7 percent to trade at $1.2664 per euro as of 12:34 p.m. in New York, recouping most of its Monday’s 1 percent loss. The dollar rose 0.2 percent to 107.11 yen, while the Japan’s currency appreciated to 135.65 per euro.
The euro fell after data indicated that Germany’s industrial production fell and authorities lowered economic growth forecast for 2014 and 2015. U.K. inflation also fell to its lowest level in five years, weakening the pound. Deflation also worsened in Sweden, pushing the krona lower.
The pound declined 1 percent to $1.5927, while the Swedish krona plunged 1.8 percent to 7.2417 per dollar and dropped 1.1 percent to trade at 9.1718 per euro.
“The situation in Europe continues to deteriorate, but the concern is spilling over into the global economy,” Sireen Harajli, a New York-based strategist at Mizuho Bank Ltd., told Bloomberg News. “The dollar continues to benefit in this environment, in our view, and the incoming data continues to support that.”
Germany’s Economy Ministry lowered its growth forecast for 2014 to 1.2 percent from its earlier estimate of 1.8 percent, and reduced its forecast for 2015 to 1.3 percent, down from 2 percent previously.
Eurostat reported that euro-area factory production fell 1.8 percent in August, the weakest level since 2009.The Mannheim-based ZEW Center for European Economic Research reported that its gauge of analyst and investor expectations dropped to minus 3.6 in October, the weakest level since November 2012. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.
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