The Euro dropped to a 2-week low versus the U.S. Dollar, following the release of weak economic data from the Euro zone and the realization that interest rates for the Euro zone will not be hiked any time in the near future.
According to Ifo Economic Research Institute, the Index of German Business Sentiment for June fell to 97.5, which was worse than the expected 100.0 reading, and the lowest in almost 2-1/2 years. The Ifo Index showed that activities in the service and manufacturing sector in Germany, France and the Euro zone dropped. According to analysts, the ECB may be very reluctant to increase interest rates.
Mr. Michael Klawitter, a strategist at Dresdner Kleinwort said that the Ifo figure “is a horrible number” and that the authorities at the ECB cannot afford to ignore it. It is expected that the Ifo figure will impact the discussions at the next ECB meeting in August.
The U.S. Dollar was near a 1-month high versus the Yen, as a result of a drop in the price of oil, coupled with hawkish statements by some Federal Reserve officials. The U.S. crude oil price dropped to $123.63 per barrel, the lowest since June of this year.
On July 24, 2008 at 08:23 GMT, the U.S. Dollar gained against the Yen to 107.80 Yen, while the Euro fell against the U.S. Dollar to $1.5638.