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Euro Taken Aback by Disappointing German Data and Peripheral Euro Zone Debt


The euro’s exchange rate went just above $1.3900 early Tuesday in Asia after falling for two straight days in a row. Apparently, the reasons why this occurred are because of the disappointing German data, as well as the concerns about debts in the peripheral euro zone.

Euro fell to as low as $1.3885 that is 2.8 percent down from its 9 and a half month record high of $1.4281 set until last week. Their lowest record for this month reached down to $1.3860, which could trigger a move toward $1.3700.

Since the policy setting meeting made with the U.S Federal Reserve last week, as well as the decision to bring in $600 billion to encourage recovery, the foreign exchange market drove its attention to the problems in peripheral euro zone sovereign debt as the topmost factor.

This includes problems about a political impasse in Dublin regarding the key-budget vote that lead to increased Irish bonds by more than 8 percent on Monday.

The unexpected fall in the output of German industry also added to the euro’s despairs although there are figures that point to a rush in German exports that might indicate solidity in Europe’s largest economy.

Currently, euro’s last was at $1.3923 in comparison to $1.3916 in New York late on Monday. It also hit its two-month low against Australia at A$1.3717. However, the drop in the single currency helped the U.S dollar to gain broadly.

The G20 summit that will be held later in the week has been perceived as a chance for the leaders of different countries to avoid a currency row to increase in a rush that might put the global recovery at risk.

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