Dollar Loses Ground to Euro on Weak U.S. Economic Data

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Dollar Loses Ground to Euro on Weak U.S. Economic DataThe dollar fell to almost its lowest level against the euro in two weeks today as traders snapped up the euro after a report showed new U.S. factory goods orders fell in December, while fears over Greece’s debt burden eased. The Australian dollar nosedived after the central bank slashed its benchmark interest rate.

A string of weak U.S. economic data has lowered bets the Federal Reserve may raise interest rates from the current record lows by June, causing traders who had speculated against the euro to scamper back for the shared currency. The momentum was sustained on Tuesday following a proposal by Greece’s new government to solve the country’s debt woes, reducing concerns the country may exit from the euro area. The euro touched a high of $1.14675, its strongest level since Jan. 22 this year.

“We’re building on a short-covering bounce in the euro helped by diminishing risks of a Greek exit,” Marc Chandler, a New York-based global head of currency strategy at Brown Brothers Harriman, told Reuters. Mr. Chandler revealed the weak U.S. data had lowered expectations of an imminent interest rate hike by the Fed.

The euro traded near an 11-year low of $1.1098 last hit on Jan. 26 after the European Central Bank launched an unprecedented bond-purchase program. Also following the euro’s trend was the Swiss franc, which rose slightly versus the dollar after touching the lowest level in two weeks versus the U.S. currency on Monday.

The euro last traded 1 percent higher versus the dollar at $1.14570, while the dollar traded 0.42 percent lower at 0.92285 franc. However, the dollar remained mostly stable versus the yen at 117.545 yen. The dollar index, which tracks the U.S. currency versus six major peers, was 0.73 percent down at 93.811. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.

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