News Column

Dollar Holds Recent Gains Versus Euro On Soft German Data

August 12, 2014

WASHINGTON (Alliance News) - The dollar was generally stronger in quiet dealing Tuesday, staying near its highest in nine months versus the reeling euro.

Downbeat German economic data raised expectations that the European Central Bank will eventually capitulate by offering further monetary stimulus.

So far the week has been shy of first-tier economic data from the US, leaving traders to focus on Europe's frailties in dealing with a sluggish recovery and the threat of deflation.

Germany's economic confidence weakened notably to the lowest since December 2012, survey results from the Mannheim-based Centre for European Economic Research/ZEW showed.

The indicator of economic sentiment fell by 18.5 points to 8.6 in August, due to the ongoing geopolitical tensions. This was the lowest score since December 2012, when the reading was 6.9. The expected score for August was 17.

The dollar rose to USD1.3360 versus the euro, just shy of last week's 9-month peak. There was little movement near Y102.20 versus the yen, and the dollar held near USD1.6820 versus the sterling.

Yesterday's dovish remarks from a top Federal Reserve official did little to dent the dollar.

Fed Vice Chair Stanley Fischer said US and global economic recoveries have been somewhat disappointing so far, hinting that the Fed will maintain its ultra-low interest rates for an extended period.

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Source: Alliance News

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