The euro fell on Tuesday after weak economic data from Germany.
At noon, the common currency euro cost 1.1045 US dollars. In the morning it was almost half a cent higher. The European Central Bank (ECB) set the reference rate at $1.1096 on Monday afternoon.
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The mood in the German economy, which deteriorated again, weighed on the euro. The Ifo business climate fell in July for the third month in a row. The decline was also stronger than expected. “After the third decline in a row, the Ifo business climate is pointing down just as clearly as the other leading indicators,” commented Commerzbank chief economist Jörg Krämer. “Even if the German gross domestic product should have increased somewhat in the second quarter, the broad-based decline in the leading indicators points to a renewed contraction of the German economy in the second half of the year.”
The markets are awaiting the monetary policy decisions of the US Federal Reserve on Wednesday and the ECB on Thursday. One rate hike by 0.25 percentage points is considered agreed by both central banks. However, it is unclear what will happen next. According to Krämer, the current Ifo data should strengthen the position of members in the ECB who are against further rate hikes after Thursday’s meeting.
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FRANKFURT (dpa-AFX)
