Euro slips as Germany enters recession, dollar hits 2-month peak
Timilehin Adejumobi
1 min read
The euro dropped on Thursday as Europe’s largest economy Germany was confirmed to be in a recession, while the dollar hit a two-month peak, benefitting from safe-haven demand as worries mounted about a U.S. default.
The latest concern was raised by ratings agency Fitch, who put the United States’ “AAA” debt ratings on negative watch, a precursor to a possible downgrade should lawmakers fail to agree to raise the debt limit.
The greenback has paradoxically benefited from demand for safe havens with only a week left for a resolution to slow-moving debt ceiling talks before the June 1 “X-date”, when the Treasury has warned it will be unable to pay all its bills.
“It has been risk-off this week and that has benefitted the dollar generally,” said Stefan Mellin, senior analyst at Danske Bank.
Escalating signs of economic malaise in Europe sent the euro to multi-month lows against the dollar.
The latest sign of weakness out of Europe came from Germany, where the economy contracted slightly in the first quarter, and thereby was in recession after negative growth in the fourth quarter of 2022.
This report’s information was first seen on REUTERS; to read more, click this link.
