The common currency euro was quoted at 1.0771 dollars at midday, almost half a cent below the level of the previous evening. The European Central Bank last set the reference rate at $1.0822 on Monday afternoon.
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On the one hand, the euro suffered from the broad-based strength of the dollar. There is still no breakthrough between the White House and the Republicans in the US debt dispute. However, both sides were satisfied with the course of the most recent top-level talks. US President Joe Biden and Republican negotiator Kevin McCarthy spoke of a productive meeting.
The dispute is about raising the national debt limit. Without an agreement, the US is threatened with a default at the beginning of June, with potentially serious consequences for the US financial markets and the world economy.
On the other hand, economic data fell out of the euro zone disappointing. Corporate sentiment clouded over somewhat more than had been feared in May, but still points to an economic recovery.
In the meantime, little will change in the growth constellation, wrote Thomas Gitzel, chief economist at VP Bank: “Southern Europe will benefit from a good tourism season, while the largest economy in the euro zone, Germany, remains the problem child.” The industry-heavy German economy is suffering particularly badly from the global uncertainties and the country’s private households are saving on domestic consumption and instead spending their money in the south over the summer.
FRANKFURT (dpa-AFX)
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