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Euro hits 9-month low

Wednesday, August 06 09:09:05

The euro slipped to a nine-month low on Wednesday, extending its losses after data showed a sharp drop in German industrial orders, while the New Zealand dollar took a hit after a fall in dairy prices.

A Singapore-based trader said investor risk aversion on concerns about the tensions in Ukraine helped to bolster the dollar broadly, and weighed on the euro.

The euro fell to as low as $1.3349, its lowest level since November. It last stood at $1.3361, down 0.1 percent on the day.

The common currency weakened after data showed that German industrial orders in June posted their biggest monthly fall since September 2011 as geopolitical developments and risks made companies more cautious about taking on contracts.

That helped lift the dollar to a fresh 11-month high against a basket of major currencies. The dollar index rose to as high as 81.637, its highest level since last September.

Helping to support the dollar, data on Tuesday showed that the U.S. services sector activity hit an 8-1/2 year high last month and factory orders surged in June, bolstering expectations of solid economic growth in the third quarter.

Over time the euro is likely to head lower versus the dollar, due to a divergence in the outlook for monetary policies of the United States and the euro zone, he said.

Bargmann said that while the market was already short the euro, he expects these bearish bets could grow further.

In addition to the European Central Bank's policy meeting on Thursday, the focus will be on forthcoming U.S. economic data and whether they come in strong enough to push forward market expectations for the timing of a Fed rate hike, he added.

The dollar held steady versus the yen near 102.58. (Reuters)

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