The Euro to US Dollar dropped to its lowest level in five-weeks on Tuesday as weak economic sentiment data and comments from the German Bundesbank weighed upon the single currency.
The Euro fell following the release of economic sentiment reports which showed that sentiment in Germany and the wider Eurozone region fell sharply in May.
Comments made by the Bundesbank also piled pressure upon the Euro. The banks governor Jens Weidmann told the Wall Street Journal that the bank would support the introduction of new monetary easing measures at next month’s ECB policy meeting if this week’s Eurozone inflation data comes in weakly.
The comments mark the firmest signal yet that the Bundesbank, which for years been defined by its mild opposition to the ECB’s emergency measures to combat the Euro zone’s debt crisis, is fully engaged in the fight against super-low inflation in the Euro zone by using monetary policy tools.
As the session progressed the Euro edged away from the earlier session lows but remained close to the five-week low.
The single currency then clawed back some of its earlier losses after the US Commerce Department released data which showed that retail sales in the world’s largest economy increased by just 0.1% in April. The figure was below the 0.4% forecast by the policy makers and was a sharp decline from the previous month’s revised figure of 1.5%.
According to the data core retail sales were flat in April.
The US Dollar could make gains against the Euro on Wednesday as the latest Eurozone industrial production data is expected to show a decline in production in March. US PPI data is also due for publication.
Euro (EUR) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Euro,,US Dollar,1.3714 ,
Euro,,British Pound,0.8146 ,
Euro,,Australian Dollar,1.4632 ,
Euro,,Canadian Dollar,1.4943 ,