News Column

Dollar Steady As German Factory Output Plunges

July 7, 2014

WASHINGTON (Alliance News) - The dollar was steady Monday as focus shifted to the Federal Reserve and downbeat economic news out of Europe.

German industrial output fell 1.8% on the month in May, its biggest drop in more than two years.

The news raised speculation that further stimulus from European Central Bank is imminent.

Policy makers in the euro zone were waiting for evidence that the 17-nation bloc was getting back on track, but with economic powerhouse Germany showing signs of strain the ECB will likely inject liquidity before summer's end.

The Federal Reserve is also seen keeping its easy monetary policy in place, not wanting to risk the fragile US recovery.

Hints about the Fed's outlook on interest rate may be seen Wednesday upon the release of minutes from their June monetary policy meeting.

Meanwhile, the Bank of England is expected tighten soon, driving the sterling to the highest in years versus its major counterparts.

The dollar held near a 5-year low of USD1.7150 versus the sterling on Monday, while the euro was at its lowest in about 22 months compared to its UK counterpart.

The buck was stuck at USD1.36 versus the euro in choppy trading despite the weak German data.

There was little movement for the dollar against the yen, as the pair remained in a tight range near 101.80.

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Source: Alliance News

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