Euro drops against the dollar

The euro has ended at its lowest level against the US dollar in two weeks as weak data from Germany indicates that recovery in the eurozone remains sluggish. The news also means the European Central Bank could move ahead with an interest rate cut.

At its lowest point the euro was trading at $1.2971 and was last at $1.2998. Data for April suggests that Germany suffered its first shrinking of the private sector during the month for five months. The news overshadowed more positive data coming out of France.

Fears of a global slowdown are also being stoked by poor factory growth numbers from China and less than impressive manufacturing figures from the US. The euro is likely to come under increased pressure if the ECB does take the decision to push down the inflation rate which is already at the record low of 0.75 per cent.

However, it is not all gloom with the single currency as it hit a one-month high against rival the Swiss franc. Against the yen the euro dropped 0.3 per cent to end at 129.22 yen. The dollar has risen 0.3 per cent against Japanese currency to reach 99.45 yen, still tantalizingly close to breaking the 100 yen barrier.

Investors will now be looking to a policy meeting later in the week to see how the central bank’s monetary easing plans are progressing.