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Euro Reaches Five-Month Low

Common currency dropped nearly 1% to $1.0631 on Friday, breaching the previous low of the year set in February - Reuters
Common currency dropped nearly 1% to $1.0631 on Friday, breaching the previous low of the year set in February - Reuters
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Euro Reaches Five-Month Low

Common currency dropped nearly 1% to $1.0631 on Friday, breaching the previous low of the year set in February - Reuters
Common currency dropped nearly 1% to $1.0631 on Friday, breaching the previous low of the year set in February - Reuters

The euro fell to its lowest level this year as the European Central Bank looks set to cut interest rates before the Federal Reserve, fueling market discussion of just how much further it could fall.

The common currency dropped nearly 1% to $1.0631 on Friday, breaching the previous low of the year set in February and reaching the weakest in five months. It’s headed for a 2% weekly decline, which would be the worst since late 2022, according to Bloomberg.

The selloff, which follows the ECB’s clearest signal yet rate cuts are looming, is fueling talk among strategists that the euro can fall further to $1.05 by mid-year and even reach parity if the Fed stays on hold this year.

Banks including Bank of America Corp. ING Bank NV and Germany’s LBBW have already warned on the risk.

Adding to pressure on Friday were reports that Israel is bracing for a possible attack from Iran, which boosted demand for the safe-haven dollar.

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Oil Edges Up on Strong US GDP Data

A pumpjack brings oil to the surface in the Monterey Shale, California, US April 29, 2013. REUTERS/Lucy Nicholson/File Photo
A pumpjack brings oil to the surface in the Monterey Shale, California, US April 29, 2013. REUTERS/Lucy Nicholson/File Photo
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Oil Edges Up on Strong US GDP Data

A pumpjack brings oil to the surface in the Monterey Shale, California, US April 29, 2013. REUTERS/Lucy Nicholson/File Photo
A pumpjack brings oil to the surface in the Monterey Shale, California, US April 29, 2013. REUTERS/Lucy Nicholson/File Photo

Oil prices were up slightly on Friday on stronger-than-expected US economic data that raised investor expectations for increasing crude oil demand from the world's largest energy consumer.

But concerns about soft economic conditions in Asia's biggest economies, China and Japan, capped gains.

Brent crude futures for September rose 7 cents to $82.44 a barrel by 0014 GMT. US West Texas Intermediate crude for September increased 4 cents to $78.32 per barrel, Reuters reported.

In the second quarter, the US economy grew at a faster-than-expected annualised rate of 2.8% as consumers spent more and businesses increased investments, Commerce Department data showed. Economists polled by Reuters had predicted US gross domestic product would grow by 2.0% over the period.

At the same time, inflation pressures eased, which kept intact expectations that the Federal Reserve would move forward with a September interest rate cut. Lower interest rates tend to boost economic activity, which can spur oil demand.

Still, continued signs of trouble in parts of Asia limited oil price gains.

Core consumer prices in Japan's capital were up 2.2% in July from a year earlier, data showed on Friday, raising market expectations of an interest rate hike in the near term.

But an index that strips away energy costs, seen as a better gauge of underlying price trends, rose at the slowest annual pace in nearly two years, suggesting that price hikes are moderating due to soft consumption.

China, the world's biggest crude importer, surprised markets for a second time this week by conducting an unscheduled lending operation on Thursday at steeply lower rates, suggesting authorities are trying to provide heavier monetary stimulus to prop up the economy.