Reuters: US Dollar Report: FOREX-Euro slides to two-week low vs dollar on soft German data

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FOREX-Euro slides to two-week low vs dollar on soft German data Apr 23rd 2013, 13:08 Tue Apr 23, 2013 9:08am EDT * Weak German PMI fans ECB rate cut speculation * Slower Chinese manufacturing growth helps yen recover * Aussie falls to 6-week low vs U.S. dollar By Gertrude Chavez-Dreyfuss NEW YORK, April 23 (Reuters) - The euro dropped to a two-week low against the dollar on Tuesday after weak German data raised concerns about the health of the euro zone economy, reviving speculation that the European Central Bank could cut interest rates. A survey showed Germany's private sector shrank for the first time in five months in April, overshadowing improvements in French data. The soft German data added to worries about the global economic outlook after earlier figures showed Chinese manufacturing growth slowed in April. These reports also helped the yen to move higher and drove the commodity-linked Australian dollar to a six-week low against the U.S. dollar. "Given the deteriorating fundamentals in the euro zone, the prospect of (an ECB rate hike) has certainly increased," said Boris Schlossberg, managing director of FX strategy, at BK Asset Management in New York. "A rate cut would be the quickest and least expensive policy course." The euro fell as low as $1.2971 and could break decisively out of the $1.30 to $1.32 range that has held for the past couple of weeks. It was last down 0.7 percent on the day at $1.2978. Comments on Monday from ECB policymakers about falling inflation and poor growth prospects in the euro zone suggested the central bank may be leaning toward a cut in its main refinancing rate, which stands at a record low 0.75 percent. More losses could push the euro towards chart support at its 200-day moving average around $1.2936 and the early April low of $1.2740. Ken Dickson, investment director at Standard Life Investments, in Edinburgh, Scotland, said the single currency should be significantly lower. Standard has had a short euro position for some time. "A rate between $1.10 and $1.20 is reasonable over the next three or four quarters." YEN RECOVERS The euro fell 1 percent to 128.36 yen, moving further away from its April 11 three-year peak around 131.10 yen. The yen, which typically rises as investors seek safety during times of heightened concern about the global economy, recovered broadly, with the dollar last down 0.3 percent at 98.88 yen. The dollar has faced stiff resistance at the 100 yen level, having stalled at a four-year high of 99.95 yen earlier this month, but most analysts and traders still believe it is on track to scale this peak. Strategists said the yen could take its cue from the next batch of Japanese capital flows data due on Thursday. A focal point for the yen is whether the BoJ's aggressive monetary easing will prompt Japanese investors to increase their purchases of higher-yielding overseas assets. The following day, investors will look to the BOJ's policy meeting for clarity on how policymakers intend to implement the easing measures. "It's probably just a matter of time, but there's no big catalyst until Thursday's data and BOJ meeting on Friday. We will go through 100 yen; it's just a question of when," said Geoff Kendrick, FX strategist at Nomura. The dip in the Chinese manufacturing data and falls in commodity prices pushed the Australian dollar down 0.4 percent to a 6-week low of $1.0221. It also lost around 1 percent against the yen Link this Share this Digg this Email Reprints

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