Dollar Gains against Euro as German Economic Activity Slows Down

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Dollar Gains against Euro as German Economic Activity Slows DownThe dollar gained against euro today as analysts fretted about the slowdown of Germany’s economy and the expected rise of borrowing costs in the United States.

Economic figures show that private sector activity in March slowed down in Germany, which was contrary to what investors had expected of the Europe’s biggest economy.

This is a marked reversal from its recent high after data indicated that French economic activity rose in March to a record high in more than 2 and half years, exceeding economists’ expectations of a further decline.

The poor showing by Germany has fuelled speculation that the European Central Bank may roll out more monetary-easing measures, which may probably lead to a weaker euro, said Boris Schlossberg, a New York-based head of forex strategy at BK Asset Management, to Reuters

“Germany is going to determine ECB policy,” he added.

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The euro has partly remained strong due to the view by most investors that Europe’s central bank is hesitant to further ease the monetary policy.  This prompted Herman Van Rompuy, the president of the European Council to protest last Friday that the currency is making it hard for Euro zone exporters to source markets.

The euro was trading 0.13 percent lower against the dollar at $1.3775. The dollar index, which measures the dollar’s strength against major currencies, was trading 0.1 percent higher.

However, the dollar was 0.02 percent lower against the yen at $102.23 after Monday’s decline in U.S. shares prompted investors to snap up the yen, which is widely regarded as a safe-haven currency.

The three main U.S. stock indexes plummeted, with the S&P’s 500 valued 0.73 percent lower. The U.S. Manufacturing Purchasing Managers Index fell from 57.1 in March to 55.5 in February. However, a measure above 50 shows that the economy is expanding, so the figures had minimal effect on the value of the dollar.

To contact the reporter of this story; Jonathan Millet at john@forexminute.com