Dollar gained agains the major rivals despite ISM Manufacturing Index
fall in October to lowest level since 1982, suggesting contraction in
U.S. manufacturing.
Earlier the yen fell against the euro on speculation a drop in
interbank borrowing costs will encourage investors to step up purchases
of higher-yielding assets financed by low-cost loans in Japan's
currency.
The dollar gained against the euro as evidence that Europe’s economic outlook is “precarious”.
Growth expected to grind to a halt next year and put government
finances under significant pressure, the European Commission warned on
Monday.
Growth in the European Union is expected to slow sharply from 1.4 per
cent this year to just 0.2 per cent in 2009, according to the Brussels
executive’s latest economic forecast. The eurozone – covering the 15
countries that share the euro – would slow from 1.2 per cent to just
0.1 per cent.
Eurozone inflation would average 2.2 per cent next year and 2.1 per
cent in 2010 – almost within the European Central Bank’s target of an
annual rate “below but close” to 2 per cent. Falling commodity prices,
the weaker growth outlook and the outlook for unemployment had reduced
the dangers of inflationary pressures becoming entrenched, it said.
The gloomy outlook prompted Joaquin Almunia, economic and monetary
affairs commission, to call for “co-ordinated action at the EU level to
support the economy” in the same way governments had acted to shore up
the banking system.