NEW YORK (Reuters) - The dollar rose on Tuesday to its highest in nearly three years against the euro, which was pressured by a German survey showing slumping investor confidence in Europe’s largest economy.
The euro was 0.38% lower against the dollar at $1.0793, its first fall below the $1.08 level since April 2017.
On Tuesday, Germany’s ZEW research institute said in its monthly survey that investors’ mood deteriorated far more than expected in February, on worries the coronavirus would dampen world trade.
The survey added to expectations the German economy will lose more momentum in the first half as slumping exports keep manufacturers mired in a recession.
“The scale of the erosion in confidence potentially sets the stage from similarly poor results Friday when Germany and the euro zone issue preliminary PMI surveys,” said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington.
Some economists fear the coronavirus, which started in China and is impacting both the global supply chain and Chinese demand, could result in weaker German growth in the first quarter.
The euro has lost around 3.7% of its value against the U.S. dollar this year, its worst year-to-date performance in five years.
Poor euro area data has boosted speculation that monetary policy will remain looser for longer than previously expected.
The U.S. economy has proved more resilient than the rest of the world, keeping the dollar at 4-1/2 month highs against a basket of currencies =USD. Other safe-haven assets such as the Swiss franc and Japanese yen have also benefited.
“Only when the virus issue dies down and the impact from all the stimulus around the world starts to become apparent, will we see downward pressure on the USD,” Brad Bechtel, managing director, Jefferies in New York, said in a note.
The Federal Open Market Committee is expected to issue minutes from its Jan. 28-29 meeting on Wednesday.
Speculators increased their net long dollar position in the latest week, according to calculations by Reuters and U.S. Commodity Futures Trading Commission data released on Friday.
China's offshore-traded yuan fell 0.3% to an eight-day low of 7.0109 against the dollar CNH=.
Norway's crown, closely correlated with global growth and trade, plunged to a 19-year low of 9.3378 against the U.S. dollar. NOK=D3, down 0.8% on the day.
Against the greenback, the Australian dollar AUD= was 0.4% lower, while the New Zealand dollar NZD= fell 0.78%. The risk-sensitive currencies were jolted lower as a production warning from Apple AAPL.O highlighted the mounting economic costs of the coronavirus and spooked investors across Asia.
Sterling was little changed on the day at $1.2997 after Britain’s new finance minister said he would deliver the budget as planned in three weeks, while a broadly weaker euro also supported the British currency.
Reporting by Saqib Iqbal Ahmed; Editing by David Gregorio and Lisa Shumaker
Our Standards: The Thomson Reuters Trust Principles.