Euro weakens on rate controversy

Euro weakens on rate controversy

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The euro was weaker Monday on perceived disagreements among officials of the European Central Bank concerning how low Eurozone interest rates might fall.

Meanwhile, the Australian and New Zealand dollars were lower as investors looked to the US dollar and the yen as safe investments, at least partly on concerns surrounding the apparent disagreement among ECB officials.

It cost $1.2922 to buy a euro in late morning trade in New York, while the shared currency was worth ¥127.0707.

The yen appreciated to ¥98.34 to the greenback at the same time.

In addition to concerns that the problems among ECB officials could further hurt the global economy, the Australian and New Zealand currencies were also hurt by declines in equities markets that were at least partly a result of worries that US banks could suffer more losses in the short term.

Also, the Aussie declined on a report that producer prices in Australia dropped 0.4 percent in the first quarter, against expectations that they would go higher.

The Australian dollar traded at 70.34 cents US and it took ¥69.1707 to buy the Aussie at late morning in New York, while the New Zealand dollar traded at ¥54.664 and was worth 55.62 cents US.

The pound weakened after the Confederation of British Industry forecast that the UK economy will shrink by 3.9 percent this year.

Additionally, a report from Rightmove (LSE: RMV) said that UK house prices were down 7.3 percent in the past year, although house prices were up by 1.8 percent in April over the previous month.

The pound traded at 89.91p to the euro in late morning trade in New York while it took $1.4533 to buy a pound.