The euro moved lower again as European trading got underway after a calm Asian session. With the upcoming EU Summit this weekend, investors are unlikely to take risks and are going to minimise exposure to the single currency as uncertainly swirls around whether European leaders will be able to make progress on resolving the region’s debt crisis.
There is a huge divide between European policy makers, mainly between Germany and France, over the best way to bolster Europe’s rescue fund, known as the European Financial Stability Facility (EFSF).
An already weak market sentiment was further hurt by disappointing data from Germany, which fuelled recession concerns for Europe’s biggest economy. The influential Ifo business climate released at 0800 GMT fell in October for the fourth month in a row.
This pushed euro further down again the dollar by another 40 pips to as low as 1.3703 within 10 minutes of the data.
The German Ifo business index is based on a survey of about 7,000 businesses which asks respondents to rate the relative level of current business conditions and expectations for the next 6 months in Germany.
The index fell to 106.4 in October from the previous 107.4, though slighter better than expectations of 106.3.