Euro exchange rate lower as ECB optimism fades

The euro suffered a third straight day of falling after enjoying monthly highs earlier in the week as investors’ optimism faded over the European Central Bank’s plans to tackle the region’s debt crisis.

The common currency went down by 0.3 per cent to $1.2270 declining further from Monday’s one-month peak of $1.2444. It looks set to suffer its first weekly loss since the middle of last month.

Disappointing trade data from China on Thursday also contributed to other currencies including the Australian dollar dropping back. Despite the weaker-than-expected data, losses in China were limited because analysts are forecasting that the country will soon inject further monetary stimulus into the economy.

Optimism about the ECB introducing measures to help Spain and Italy lower their borrowing costs had helped the single currency leap to a one-month high against the greenback, but hopes have since faded and many investors have chosen to offload the currency.

The euro has also felt the effects of weak economic data within the euro bloc in the last several days. The economy ministry in Germany has warned that the European powerhouse’s economy is likely to be put under significant pressure as a consequence of the continuing crisis across the region.
Euro, European central bank, us dollar, euro debt crisis, Australian dollar, china trade data