Dollar Up Sharply Versus Euro As Germany Cuts Growth Forecast
Washington (Oct 14) The dollar rallied versus the euro Tuesday, moving back toward 2-year highs from earlier this month, amid more dismal economic news from Germany .
The German government has slashed its growth forecasts for this year and next, citing numerous economic headwinds including sanctions on Russia and weaker exports.
The economics ministry cut its forecast for economic growth this year to 1.2% from an earlier forecast of 1.8%, and to 1.3% for 2015 from 2% previously.
A report earlier in the day showed German investor confidence decreased for a 10th month in October to its lowest in nearly two years.
The ZEW Center for European Economic Research in Mannheim said its index of investor and analyst expectations declined to minus 3.6 this month from 6.9 in September.
Another report from Eurostat showed that Eurozone industrial production logged a bigger than expected decline in August after recovering last month.
Industrial output fell 1.8% from the previous month versus forecasts for a 1.6% fall.
With the European Central Bank expected to bow to public pressure and offer stimulus next month, the dollar rose to USD1.2660 versus the euro, up more than a penny from the previous session.
The dollar extended its recent gains against the sterling, improving to USD1.59 while nearing a fresh 10-month peak.
Early losses took the dollar near Y107 versus the yen. The buck has leveled off since hitting a 6-year peak near Y110 two weeks ago.