Dollar Edges Higher, Euro Falls After Weak German Economic Data
The U.S. Dollar in Early European Trade
The U.S. dollar saw a rise in early European trade on Tuesday, bouncing back after slipping from its 3-week high overnight. This rebound occurred while weak German economic data weighed on the euro.
Dollar Index and Rate Cuts
At 03:45 ET (08:45 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.1% higher at 102.067. This came after falling from three-week highs in the prior session due to uncertainty over rate cuts in 2024, which spurred some profit-taking.
Dollar Off Three-Week High
The dollar posted gains of around 1% last week as doubts started to emerge over whether the Federal Reserve will begin cutting interest rates as early as the first quarter of 2024. However, it drifted lower on Monday following relatively dovish Fedspeak.
Euro Dips on Weak German Economic Data
In Europe, the euro traded 0.1% lower at 1.0945, after data showed that industrial production unexpectedly fell by 0.7% in November on a month-on-month basis, marking the sixth monthly decline in a row.
European Central Bank’s Monetary Policy
The European Central Bank has tried to make the case for keeping interest rates at record highs for some time but is likely to come under pressure to ease monetary policy given the weakness of the German economy, Europe’s biggest.
Japanese Inflation Drops
Elsewhere, the yen traded 0.1% lower to 144.09, after data showed inflation in Japan fell closer to the Bank of Japan’s 2% annual target range in December.
