The euro fell to the lowest level in almost two months against the United States dollar on speculation a report today will show that European producer prices slid a fifth month, giving the region's central bank more room to cut interest rates.
The pound declined the most in almost two weeks on concern that the United Kingdom banking crisis will deepen after Moody's Investors Service cut its long-term debt rating of Barclays Plc. The yen strengthened for a third day against the dollar before a US report that economists say will show manufacturing fell to the lowest level since 1980, adding to signs that the global recession is worsening, Bloomberg News reported.
"Inflation is slowing and the eurozone economy is deteriorating," said Yuji Saito, head of the foreign-exchange group in Tokyo at Societe Generale SA, France's third-largest bank by market value. The euro was likely to be sold to US$1.27 and 113 yen yesterday, he said.
The euro dropped to US$1.2720 as of 8am in London from US$1.2813 late in New York on Friday. It reached US$1.2707, the weakest since December 5. Europe's single currency slid 1.2 percent to 113.83 yen from 115.23 yen. The pound declined 1.6 percent, the most since January 20, to US$1.4308. Against the euro, the pound fell 0.9 percent to 88.90 pence.
(Shanghai Daily February 3, 2009)
