Euro falls to 22-month low as German business confidence slides

Slowdown Signs

The euro fell 5 percent in the past six months, making it the worst performer among 10 developed-nation currencies, according to Bloomberg Correlation-Weighted Indexes. The dollar gained 1.7 percent during the period.

A German index based on a survey of purchasing managers in the manufacturing industry declined to 45 this month from 46.2 in April, London-based Markit Economics said in a report today. Economists had forecast a reading of 47, according to the median estimate in Bloomberg News survey. The Munich-based Ifo institute said its German business climate index dropped to 106.9 in May from 109.9 a month earlier. Economists predicted 109.4, another survey showed.

“The euro remains in a bearish trend,” said Callum Henderson, global head of currency research at Standard Chartered Plc in Singapore. “There needs to be a greater focus on growth, but at the same time, there also has to be a credible long-term plan for fiscal and debt consolidation throughout the region. At the moment, you have neither,” he said.

Dollar Index

The Dollar Index rose 0.1 percent to 82.103 after climbing to the highest since September 2010.

“It seems likely that the dollar will be reasonably well bid,” said Michael Turner, an economist at RBC Capital Markets Ltd. in Sydney. “People are concerned about what the implications of a Greece exit from the euro zone might be.”

The Dollar Index tracks the greenback against the currencies of six U.S. trading partners.

The gauge “maintains the overall bullish bias and risk for additional upside,” Niall O’Connor, a technical analyst in New York at JPMorgan Chase & Co., wrote in a research note yesterday. The gauge may rise to 82.591, a 61.8 percent retracement of its decline from June 2010 to May 2011, O’Connor wrote, citing Fibonacci analysis.

Fibonacci analysis is based on the theory that prices increase or decline by certain percentages after reaching a new high or low.

New Zealand’s dollar gained 0.5 percent to 75.36 U.S. cents after touching 74.57 yesterday, the lowest since Nov. 28. Its 14-day relative strength index against the U.S. currency was 27, below the 30-level that some traders see as a sign that an asset may be about to reverse direction.

Bloomberg News

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