Euro Falls Versus Dollar


The euro dropped against the dollar and yen as an industry report showed German business confidence fell to the lowest in more than two years in April, indicating the U.S. economic slowdown is spreading to Europe.

The 15-nation currency declined by the most in almost a week against the U.S. dollar as the difference in yields between German two-year notes and similar-maturity Treasuries narrowed to the least in a month. The dollar rose against the yen on speculation the Federal Reserve will pause cutting rates after next week. The New Zealand dollar slid after the central bank signaled it may lower borrowing costs later this year.

The euro fell 0.9 percent to $1.5750 per dollar at 7:13 a.m. in New York, from $1.5889 yesterday. It traded at $1.6019 on April 22, the highest level since its 1999 debut. The euro dropped to 163.04 yen, from 164.28 yen. The dollar was little changed at 103.50 yen.

The Munich-based Ifo institute said its business climate index, based on a survey of 7,000 executives, fell to 102.4, from 104.8 in March.

An index of sentiment among 4,000 French manufacturers slid to 106 in April from a revised 108 in March, Insee, the Paris- based national statistics office, said today. Economists expected 108, according to a Bloomberg survey.

The euro also weakened after the price of a barrel of crude oil fell. Crude for June delivery dropped as much as 1 percent to $117.12 in after-hours electronic trading on the New York Mercantile Exchange, and was at $117.39 today. It rose to a record $119.90 on April 22.

European policy makers have been wary inflation will quicken after the cost of crude surged 82 percent in the year. The euro versus the dollar has had a correlation of 0.96 with oil over the past 12 months, according to data compiled by Bloomberg. A reading of 1 would mean they move in lockstep.


TradingEconomics.com, Bloomberg
4/24/2008 6:56:42 AM