Euro falters for 2nd day as German sentiment worsens

NEW YORK Tue Aug 12, 2014 3:24pm EDT

Various Euro notes are pictured laying on a table in Warsaw February 24, 2012.  REUTERS/Kacper Pempel

Various Euro notes are pictured laying on a table in Warsaw February 24, 2012.

Credit: Reuters/Kacper Pempel

NEW YORK (Reuters) - The euro fell against the dollar for a second consecutive session on Tuesday after a weak German investor sentiment survey highlighted growing concerns about slowing growth in the region and worries about the impact of the Russia-Ukraine crisis.

Investors saw broad euro weakness with the euro index =EUR, which measures the euro zone common currency's value against five other units, down 0.2 percent on the day following the weak German data.

Germany's ZEW survey showed both the current situation and expectations indexes deteriorating in August, while the overall index fell for an eighth consecutive month, to 8.6, its lowest since December 2012 and well below forecasts. ECONDE

The West has imposed tough sanctions on Moscow, one of Germany's biggest trading partners, over Russia's role in Ukraine. Russia has responded with sanctions of its own, which could hurt the euro zone.

"The recent ... disappointing economic indicators from the world's fourth-largest economy, along with an escalation of sanctions towards Russia, has institutional investors and analysts nervous about future economic conditions," said Scott Smith, senior market analyst at Cambridge Mercantile Group in Calgary.

The euro fell to $1.3337 EUR= after the ZEW survey was released, not far from a nine-month low of $1.3331 struck on Aug. 6. It was last at $1.3367, down 0.1 percent. The euro was also 0.1 percent lower against the yen at 136.61 yen EURJPY=.

The euro's losses saw the dollar edge up. The dollar index rose 0.1 percent to 81.508 .DXY, generally benefiting from the U.S. economy's improving prospects. Still, U.S. yields remained low, tempering the dollar's rise.

The latest signals from the Federal Reserve still suggest little urgency from the U.S. central bank to raise interest rates.

"The most recent economic data and news have been somewhat mixed, which to us suggests the recent U.S. dollar rally is something of a false start," wrote Nick Bennenbroek, head of currency strategy at Wells Fargo, in a research note.

"Instead, we expect the greenback's performance to remain relatively subdued through the remainder of 2014."

The safe-haven yen stayed off highs hit late last week when concerns about the situation in the Middle East and the conflict between Ukraine and Russia were more acute. The dollar was last flat at 102.21 yen JPY=.

Apart from the euro, a big mover was the New Zealand dollar which fell to a two-month low against the greenback. It dropped to US$0.8407 NZD=D4, its lowest since June 4. It was last trading at US$0.8430, down 0.3 percent on the day.

That was a long way off a near three-year high of US$0.8839 hit last month, with the currency dogged by expectations of a slowdown in the pace of New Zealand rate rises and an ongoing tumble in global prices for dairy products, a major export.

(Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by Anirban Nag in London; Editing by Tom Brown and James Dalgleish)