Source AP ©

Euro slips against dollar

The euro dropped below US$1.46 in trading Tuesday in Europe, reaching a six-month low after a report showed German consumer confidence at another five-year low despite a drop in energy prices and amid slowing growth in Europe's biggest economy.

The 15-nation currency fell as low as US$1.4595 before edging higher to US$1.4616 in morning trading, more than a full cent below the US$1.4756 it bought in late trading in New York on Monday. The last time the euro slipped below US$1.46 was Feb. 13.

The slide came after the forward-looking GfK consumer climate forecast index dropped to 1.5 points for September from a revised 1.9 points in August, the fourth month in a row that it dropped.

"The dollar remains in favor as the week progresses with worse-than-expected German consumer confidence data this morning being the latest driver to buoy the greenback," said James Hughes, a currency analyst at CMC Markets in London.

"The ongoing economic slowdown is certainly dampening consumer appetite and this will lead to further calls for the (European Central Bank) to adopt a more accommodative approach over its monetary policy although the ongoing threat of high inflation could well ensure that rate cuts remain limited over the next 12 months," he added.

Inflation in the euro zone is at 4 percent and that poses the euro economy's biggest problem because it eats into household spending - the main engine of growth - and hikes costs for companies and exporters.

Earlier this month the European Union reported that the euro-zone economy shrank 0.2 percent in the second quarter, also raising recession fears as Germany, France and Italy braked sharply with high fuel and food prices holding back consumer spending.

In other currencies, the British pound bought US$1.8386 Tuesday, down from US$1.8525 late Monday, putting it at two-year lows. Meanwhile the dollar bought 109.87 Japanese yen compared with 109.35 late Monday in New York.

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