NEW YORK: The euro traded 0.2% from a two-year low before data forecast to show inflation slowed in Germany and manufacturing stagnated in the euro area.
The 17-nation euro declined to a one-month low against the yen after as Germany’s top court said a decision on whether to suspend legislation for the euro bloc’s permanent bailout fund and fiscal treaty could take months.
Demand for the US dollar was limited before the Federal Reserve releases minutes of its June 20 meeting when it expanded a program that replaces short- term Treasuries in its portfolio with longer-term debt.
“I would imagine the euro would test new lows,” said Hans Kunnen, chief economist at St. George Bank Ltd. in Sydney. “The constant news of crisis just saps business confidence.”
The euro was little changed at US$1.2254 as of 10:13 a.m. in Tokyo from yesterday, when it touched US$1.2235, the lowest since July 2010. The common currency touched 97.10 yen, the least since June 5, before trading at 97.12, 0.2% lower than yesterday’s close. The dollar declined 0.2% to 79.26 yen from yesterday.
In Germany, a final reading of consumer price inflation in June, calculated using a harmonized European Union method, was at 2%, economists in another survey said before the Federal Statistics Office in Wiesbaden releases its figures today. That would be the lowest rate since January 2011 and unchanged from the level indicated in the preliminary reading released June 27.
Industrial production in the euro area probably failed to grow in May after two months of decline, according to median estimate of economists in Bloomberg News survey before the data is reported tomorrow.
The Federal Constitutional Court in Karlsruhe heard arguments yesterday on whether to put German approval of the European Stability Mechanism and fiscal pact on hold until it rules on the legality. Both houses of parliament approved the new laws on June 29 with a two-thirds majority.
German President Joachim Gauck withheld his signature due to legal challenges that were discussed at the hearing. (Bloomberg/T03/TW)