September 27, 2019 / 2:36 PM / 3 months ago

FOREX-Euro drops to two-year low before rebound

    * Weak eurozone growth outlook weighs on euro
    * Loose monetary policy also weighs on single currency

 (New throughout, updates trading and comments to U.S. market open, changes byline and dateline)
    By Karen Brettell
    NEW YORK, Sept 27 (Reuters) - The euro fell to more than two-year lows against the U.S. dollar on
Friday as a weak growth outlook weighed on the single currency, though it rebounded after testing
technical support levels.
    Dismal business activity data from the euro area, especially powerhouse economy Germany, has pushed
European bond yields lower across the board this week, with further pressure coming from concern over
economic weakness in Britain.
    "We have had a steady drip of weak data from the eurozone this week and that is highlighting the
differences between the U.S. and Europe," said Commerzbank analyst Thu Lan Nguyen, adding that the United
States is still showing signs of strength.
    Negative interest rates, quantitative easing and other attempts by the European Central Bank (ECB) to
stimulate the eurozone economy are also making investment in U.S. government debt more attractive and
boosting the greenback against the euro.
    “The more recent drift lower in the euro seems to be perpetuated by the continued grind lower in
growth expectations, and certainly in realized growth in the eurozone," said Mazen Issa, senior FX
strategist at TD Securities in New York.
    Further ECB stimulus, negative rates and bond buying are also exerting a pull on the euro, he added.
    The euro dropped as low as $1.0903 -- its lowest since May 2017 -- in overnight trading before
rising back to $1.0929. 
    The single currency has technical support around $1.0925, which could provide a floor for the time
being.
    “We did break below that briefly yesterday, but that was late trading in New York, and so I think
there is going to be quite a bit of hesitance to try to push it below that on a sustainable basis,” Issa
said, noting that quarter-end rebalancing is also limiting risk taking.
    Sterling was the other big loser after Bank of England policymaker Michael Saunders hinted at
looser monetary policy if Brexit uncertainty remained prolonged against a backdrop of disappointing global
growth.
    The pound weakened to a two-week low of $1.2269 on Friday as his comments raised expectations that the
next move from the central bank could be a rate cut.
    The currency later rose back to $1.2318.
    
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    Currency bid prices at 9:56AM (1356 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
                                              Session                                           
 Euro/Dollar      EUR=        $1.0929        $1.0921     +0.07%         -4.70%      +1.0948     +1.0906
 Dollar/Yen       JPY=        108.0600       107.8200    +0.22%         -2.00%      +108.1600   +107.6700
 Euro/Yen         EURJPY=     118.13         117.74      +0.33%         -6.41%      +118.2900   +117.4700
 Dollar/Swiss     CHF=        0.9929         0.9935      -0.06%         +1.17%      +0.9948     +0.9915
 Sterling/Dollar  GBP=        1.2318         1.2322      -0.03%         -3.44%      +1.2336     +1.2272
 Dollar/Canadian  CAD=        1.3246         1.3268      -0.17%         -2.86%      +1.3278     +1.3245
 Australian/Doll  AUD=        0.6766         0.6748      +0.27%         -4.01%      +0.6768     +0.6744
 ar                                                                                             
 Euro/Swiss       EURCHF=     1.0851         1.0850      +0.01%         -3.58%      +1.0863     +1.0840
 Euro/Sterling    EURGBP=     0.8870         0.8861      +0.10%         -1.27%      +0.8896     +0.8847
 NZ               NZD=        0.6303         0.6297      +0.10%         -6.16%      +0.6304     +0.6280
 Dollar/Dollar                                                                                  
 Dollar/Norway    NOK=        9.0848         9.0797      +0.06%         +5.16%      +9.1007     +9.0657
 Euro/Norway      EURNOK=     9.9325         9.9178      +0.15%         +0.27%      +9.9412     +9.9102
 Dollar/Sweden    SEK=        9.8141         9.7635      +0.59%         +9.49%      +9.8155     +9.7531
 Euro/Sweden      EURSEK=     10.7271        10.6642     +0.59%         +4.52%      +10.7296    +10.6524
    

 (Additional reporting by Saikat Chatterjee in London
Editing by David Goodman)
  
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