Euro falls as Europe's woes flare
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NEW YORK, Nov 7 AFP
November 08 2012, 10:45AM
The euro has weakened against other major currencies after the European Union cut its economic growth forecast and the ECB chief stoked worries about powerhouse Germany.
The dollar, which had fallen after the re-election of US President Barack Obama late on Tuesday, regained ground amid a new rise in concern over the progress addressing the eurozone crisis.
About 2200 GMT (0900 AEDT) on Wednesday the euro was trading at $1.2767, down from $1.2814 at the same time on Tuesday.
Obama's victory after a long, closely fought battle with Republican Mitt Romney for the White House sparked a massive stocks sell-off on Wall Street and steep declines in crude oil prices.
The election left Congress still divided between Democrats and Republicans, and analysts said investors were worried lawmakers could remain deadlocked on fiscal reforms, allowing the harsh "fiscal cliff" package of spending cuts and tax hikes to take effect on January 1.
The euro also fell against the Japanese currency, to 102.09 yen from 102.96 yen late on Tuesday, while the dollar traded at 79.96 yen, down from 80.34 yen.
"The euro struggled to hold its ground on Wednesday as the EU slashed its growth forecast," said David Song, currency analyst at DailyFx.
The euro's losses steepened after Mario Draghi, the president of the European Central Bank, warned the eurozone's economic woes were beginning to hurt Germany, the bloc's growth engine, said Forex.com analyst Eric Viloira.
The ECB and the Bank of England are scheduled to hold monetary policy meetings on Thursday.
Neither central bank is expected to announce a change in direction, analysts said.
The dollar gained against other currencies compared with late on Tuesday. The greenback rose to 0.9449 Swiss francs from 0.9428 francs, and the pound fell to $1.5986 from $1.5999.