Euro slides as dollar stays strong

The euro slumped to its lowest level in a week yesterday
(January 30th) as weak German inflation data failed to boost
investor sentiment in the face of the dollar’s rise.

In sessions marked by lower trading volumes thanks to New Year
celebrations in some Asian markets, the single currency slid to
$1.3543 against the greenback. At the same time theexchange
rate sank against the yen, slipping to an eight-week low
of 138.90 yen.

Inflation data coming out of German Federal Statistics
Office Destatis yesterday
failed to impress markets, after it emerged that prices have been
increasing at a softer rate than expected.

With eurozone inflation figures due out later today, speculation
remains as to whether the European Central Bank will come under
pressure to raise interest rates or take other anti-deflationary
measures.

Still, economists are forecasting the inflation rate will edge
upwards from 0.8 per cent in December to 0.9 per cent in
January.

The euro’s decline was accelerated by continued growth in the
dollar, which came after official data showed the US economy had
expanded by an impressive 3.2 per cent in the fourth quarter of the
year.

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