Dollar down as US economy stumbles

Published: 1 May at 9 AM Tags: Euro, Dollar,

The US dollar has hit a two-month low following a slew of disappointing data. The lackluster state of the world’s largest economy is likely to see the Federal Reserve announce that it will continue with its bond-buying programme. Figures for April show that in the US Midwest business activity is shrinking. Economic growth for the first quarter of the year across the whole country was also weaker than expected.

The eurozone could see a cut in interest rates after the European Central Bank meets to discuss policy this week. The euro is currently riding high against the dollar at $1.3154, an increase of 0.4 per cent.

Analysts are attributing the strength of the single currency to doubts that the Fed will pull back on its policy of quantitative easing any time soon. However, unemployment across Europe has hit a record high, retail sales in Germany are down and the Spanish economy continues to flounder.

If the ECB chooses to cut interest rates the euro is likely to dip initially and then bounce back.

Poor US data has also resulted in the dollar dropping 0.2 per cent against the yen to 97.54 yen. Last month it looked as though the greenback would break through the 100 yen barrier.