Euro Falls to Eight-Week Low Against Dollar

The euro fell to an eight-week low against the dollar on speculation the European Central Bank will keep rates unchanged while signaling concern that economic growth is slowing at a policy meeting today.

The 15-nation currency declined for a second day after the Financial Times said the U.S. and Europe want to see the dollar rise, citing officials it didn't identify. The pound traded near a 2 1/2-month low against the dollar before today's meeting of the Bank of England and after an industry report yesterday showed falling U.K. consumer confidence.

The euro's losses may be limited by a surge in the price of crude oil to a record $123.93 a barrel, Ishikawa said. Rising energy prices has pushed the inflation rate higher in Europe, delaying ECB interest-rate cuts. The euro versus the dollar has had a correlation of 0.96 with the price of crude in the past 12 months. A reading of 1 would mean they move in lockstep.

The euro weakened versus the dollar after the European Union reported that retail sales in the countries that share the single currency declined 1.6 percent in March from a year earlier, the biggest drop since the data began in 1995. The euro extended losses after a German government report showed factory orders dropped 5 percent in the year ended in March, compared with an 8.9 percent increase in the prior month.

Euro Falls to Eight-Week Low Against Dollar, Bloomberg
5/7/2008 7:04:32 PM