The euro extended its decline further down to a session low against the dollar after a weaker-than-expected reading of a German business survey highlighted sluggishness in the euro zone’s strongest economy.
The ZEW German research institute released monthly survey data indicating that business sentiment fell more than expected in Germany to -48.3 in October from -43.3 the previous month. Current conditions slipped to 38.4 from 43.6.
EURUSD fell as low as 1.3656 within 10 minutes of the data at 0900GMT, compared with 1.3685 before the announcement.
The index fell for the eighth consecutive month to the lowest level since November 2008.
The ZEW survey was based on a survey of 271 analysts and investors and conducted between October 4 and October 17, and it aims to predict developments six months in advance,
The data has shown that a slowdown has finally reached Germany. While Germany’s Bundesbank (central bank) yesterday predicted “strong” growth in the third quarter thanks to a rebound in industrial production and private consumption, it said the outlook has deteriorated.
Stocks and the euro erased gains yesterday after the German government said European leaders will not be able to deliver a complete solution to the region’s debt crisis at the EU Brussels Summit on October 23. German officials said it would be unrealistic to provide a “quick fix” to the debt crisis.