RTTNews - The euro fell against the dollar and yen on Monday in New York as global stocks fell sharply, lowering risk appeal. The European currency continued to edge higher against the pound.
Traders moved towards lower-yielding currencies as stocks in the U.S., Europe and Asia saw notable weakness on Monday amid concerns the economy may not recover as fast as hoped.
Meanwhile, the German economy is expected to perform better than anticipated in the third quarter, European Central Bank Governing Council member Axel Weber reportedly said.
The euro stabilized after reaching a 20-day low of 1.4050 against the dollar. The European currency has been trending lower since reaching a multi-month high of 1.4446 earlier this month.
On the economic front, the New York Fed said its general business conditions index rose to 12.1 in August from a negative 0.6 in July, with a positive reading indicating an expansion in the manufacturing sector. Economists had been expecting the index to increase more modestly to 3.0.
The European currency edged higher against the sterling, moving near 0.8620. The pair has been range-bound for about a week.
The euro dropped to its lowest level in almost four weeks against the yen, hitting 132.50. The 16-member currency has been trending lower since late last week.
Commenting on the Japanese GDP report, Dresdner Bank economist Wolfgang Leim said Japan's recovery is still in a fragile state. In response to poor earnings, the corporate sector is still scaling down their production capacities and holding back investment. Accordingly, the downward pressure on wages and employment levels has mounted. The general outlook for domestic demand is far from bright.
In an interview to German newspaper Sueddeutsche Zeitung on Sunday, Weber, who is also the Bundesbank President, said economic contraction in the biggest-Eurozone economy this year would be slower than the 6% predicted by the Bundesbank.
Germany unexpectedly exit recession in the second quarter. GDP rose 0.3% on-quarter, the first increase in five quarters.
Meanwhile, the Eurostat report showed that the euro area trade balance showed a surplus of EUR 4.6 billion in June, larger than the revised EUR 2.1 billion surplus recorded in May. This was the largest since June 2007, when the surplus totaled EUR 6.7 billion. On a yearly basis, exports declined 22% to EUR 106.1 billion and imports dropped 26% to EUR 101.5 billion.
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