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Euro hits 23-month high

Reuters / Khmer Times No Comments Share:
A file photo of the Euro symbol in front of the European Central Bank. AFP

LONDON (Reuters) – The euro hit an almost two-year high against an ailing dollar yesterday, largely shrugging off data showing euro zone business growth slowed last month and weighing on exporters’ shares.

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Strength in the euro, which helped pitch the dollar to a 13-month low against a basket of major currencies, depressed European automakers, other sectors and major stock indexes, while Wall Street was also indicated lower .

The euro touched $1.1684 in Asian trade, before pulling back to trade at $1.1648, down 0.2 percent on the day.

The European single currency hit a low for the day of $1.1631 after preliminary data showing German private sector growth slowed more than expected in July.

The euro has risen in recent weeks on expectations the European Central Bank will begin to scale back its bond-buying monetary stimulus scheme before long.

On Friday, the day after an ECB policy meeting, four sources with direct knowledge of the discussions said policymakers saw October as the most likely date to decide on this.

European shares fell yesterday, with the exporter-dominated German DAX index dropping 0.5 percent, slightly underperforming the pan-European STOXX 600 index, which lost 0.4 percent. The STOXX index dropped 1 percent on Friday as the strong euro weighed on earnings.

German government bond yields edged lower after euro zone business activity data also came in below forecasts.

The 10-year yield – the benchmark for euro zone borrowing costs – fell to 0.49 percent, down 0.4 basis points and its lowest in more than a week. It later nudged back up to 0.5 percent.

“A weaker dollar seems to be the path of least resistance given the soft data coming out of the US and the political uncertainty,” Michael Hewson, chief markets strategist at CMC Capital Markets in London, said.

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