NEW YORK: A poor read on the IFO business climate index for Germany for May sent the euro tumbling on Friday to its lowest level against the US dollar in three months.
The index dropped back to 110.4 from 111.2, after a gain the previous month, underscoring continuing concerns about the strength of German and European growth.
IFO chief Hans-Werner Sinn said that companies are no longer as positive about either their current business or the outlook for the next six months.
“Assessments of the current business situation were no longer as favorable as in April. Companies are also less optimistic about future business developments," he said.
The euro dropped to $1.3632, bringing its loss from the recent May 7 peak to three cents.
That weakness has been underpinned by a market convinced that the European Central Bank will take steps to further loosen monetary conditions at its June meeting.
The dollar was higher against the yen, but the euro-yen traded flat.
Bank of Japan Governor Haruhiko Kuroda told The Wall Street Journal that the government needs to do more to bolster the fight to strengthen growth and raise inflation.
“Implementation is key, and implementation should be swift," he said. “The major work to be done is by the government and the private sector."