Euro Hits Nine-Year Low Vs. US Dollar
The euro hit a nine-year low against the dollar on Thursday as bearish German manufacturing data suggested the European Central Bank may soon move to expand its bond-buying programme to bolster economic recovery.
The common European currency dipped to USD 1.1792 on Thursday morning in Europe, its lowest level since December 2005, before regaining some ground to USD 1.803, its weakest since January 2006.
The currency of 19 EU member states traded at USD 1.183 late on Wednesday. Meanwhile, the dollar was supported by a report showing a better-than expected increase in the number of new job openings in the US in December, which boosted the outlook for the US economic recovery.
Thursday’s data showing a fall in German factory orders in November coupled with Wednesday’s report from Eurostat suggesting the eurozone may be headed for a period of deflation that could harm the feeble economic recovery in Europe.
According to Eurostat, in December eurozone consumer prices fell on a year-on-year basis for the first time since October 2009. Currency analysts have interpreted the inflation reading as a potential reason for the European Central Bank to launch full-scale sovereign bond-buying in order to pump cash into the economy and spur growth as soon as its next meeting on 22 January.
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