Euro Hits Two-Week Lows Versus U.S. Dollar And Pound

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The euro was weaker against its major rivals on Wednesday in New York, as investors mulled over data showing the first annual decline in German consumer prices since March 1987.

The decline in prices was steeper than the analysts' expectations for the Eurozone's largest economy. Meanwhile, French producer prices unexpectedly rose.

The euro extended its losses against the dollar and remained near yesterday's lows against the yen, as U.S. stocks failed to recover from yesterday's slump. The European currency dropped versus the lower-yielding dollar and yen yesterday as global stocks saw red.

The dollar received a boost as New York Federal Reserve Bank President William Dudley said today that the economic contraction is slowing down and predicted that there will be moderate growth in the second half of 2009.

The euro fell to a two-week low of $1.4014 against the greenback. The European currency had reached as high as $1.4303 earlier in the week, challenging an eight-month high.

The U.S. Commerce Department released a report today showing that durable goods orders fell 2.5 percent in June following a downwardly revised 1.3 percent increase in May. Economists had expected orders to fall 0.6 percent compared to the 1.8 percent increase originally reported for the previous month.

The euro fell to a two-week low of 0.8514 against the British pound. With the drop, the common currency fell below a recent trading range.

The Bank of England said in a final report that M4 money supply increased 13.8% year-over-year in June, slower than the 16.3% growth in the previous month. The increase in M4 money supply in June was revised from 14.2% reported initially.

The euro was little changed near 133.50 yen versus the Japanese currency, holding most of the losses sees on Tuesday.

Japan's Ministry of Finance upgraded its economic assessment for the regional economy, raising its view for the first time in five years. The ministry raised its assessments for 10 of the nation's 11 regions. In its latest quarterly report, the ministry reiterated that the conditions in Okinawa remain severe.

Germany's Federal Statistical Office said the preliminary consumer price index dropped 0.6% year-over-year in July, in contrast to a 0.1% increase in the previous month. Economists had expected a decline of 0.3%.

On a monthly basis, the CPI decreased 0.1% in July. Economists were looking for an increase of 0.2%.

Earlier in the morning, the French statistical office INSEE said in a report that the producer price index rose 0.6% month-on-month in June after falling 0.3% in May. Economists were looking for a decline of 0.1%.

On an annual basis, the PPI dropped 8.7% in June. Economists' had expected a decline of 8.6% for June.

Meanwhile, the latest quarterly Bank Lending Survey from the European Central Bank showed that Eurozone banks tightened their credit standards in the second quarter.

However, the net percentage of banks that tightened credit standards for loans and credit lines extended to enterprises eased to 21% in the second quarter from 43% in the first quarter. Euro area banks see further lowering of the net tightening of credit standards in the third quarter.

The euro was weaker against its major rivals on Wednesday in New York, as investors mulled over data showing the first annual decline in German consumer prices since March 1987. (Market News Provided by RTTNews)