Dollar Drops Against Euro On Strong German Data

The dollar is losing ground against all of its major rivals Tuesday morning, but is especially weak against the Euro. The Euro is climbing following the release of the stronger than expected German GDP report. U.S. economic data was on the light side this morning, but things will begin to pick up tomorrow morning. The consumer price index, retail sales and the New York manufacturing report are all set for release on Wednesday.

Producer prices in the U.S. increased by more than expected in the month of October, according to a report released by the Labor Department on Tuesday. The Labor Department said its producer price index for final demand climbed by 0.4 percent in October, matching the increase seen in September. Economists had expected prices to inch up by 0.1 percent.

The dollar has tumbled to over a 2-week low of $1.1795 against the Euro Tuesday afternoon, from an early high of $1.1662.

The euro area economy expanded at a slightly slower pace, as initially estimated, in the third quarter, flash data from Eurostat showed Tuesday. Gross domestic product grew 0.6 percent sequentially, slightly slower than the 0.7 percent expansion seen a quarter ago.

Eurozone industrial production dropped for the first time in three months in September, data published by Eurostat showed Tuesday. Industrial production fell 0.6 percent month-on-month, reversing a 1.4 percent rise in August. The monthly decline came in line with expectations. This was the first decline since June.

Germany's economic confidence rose to a 6-month high in November, survey data from Mannheim-based think tank ZEW showed Tuesday.

The ZEW Indicator of Economic Sentiment for Germany rose to 18.7 in November from 17.6 in October. This was the highest score since May, when the reading was 20.6. Nonetheless, the score was below the expected level of 19.5.

Germany's economic growth accelerated in the third quarter, data published by the Federal Statistical Office showed Tuesday. Gross domestic product grew 0.8 percent sequentially, faster than the 0.6 percent expansion logged in the second quarter. The growth rate was forecast to remain at 0.6 percent.

Germany's inflation slowed as initially estimated in October, final data from Destatis showed Tuesday. The consumer price index rose 1.6 percent year-on-year following 1.8 percent climb in September. A similar slower rate was last seen in June.

The buck has dropped to around $1.3175 against the British pound this afternoon, from a high of $1.3062 this morning.

UK inflation held steady at the strongest level in more than five years in October as higher cost of food was offset by cheaper motor fuel prices. Consumer prices climbed 3 percent year-on-year in October, the same pace as seen in September, the Office for National Statistics reported Tuesday. Inflation was expected to accelerate to 3.2 percent.

British house price inflation accelerated in September to the highest level in almost a year, figures from the Office for National Statistics showed Tuesday. The house price index climbed 5.4 percent year-over-year in September, faster than the 4.8 percent rise in August, which was revised down from a 5.0 percent increase reported earlier.

The greenback rose to a high of Y113.909 against the Japanese Yen this morning, but has since retreated to around Y113.365.

by RTT Staff Writer

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