Euro weaker versus USD, pound, yen

The euro was weaker versus the US dollar Tuesday on speculation that the European Central Bank will cut interest rates more than previously expected due to declines in Eurozone inflation over the past few months.

Inflation in the Eurozone dropped to 1.6 percent in December, less than the 1.8 percent which had been anticipated.

Inflation in the region was at 2.1 percent in November and 3.2 percent in October.

At just before noon in New York it took $1.3430 to buy a euro while a euro was worth ¥126.7258.

The US dollar was also stronger in relation to the Swiss franc, with it taking SFr1.1224 to buy a dollar in midday trade in New York, on reports that US President-elect Barack Obama has said that he favors an economic stimulus plan that would spend $775 billion over two years to try to get the US economy back on track.

Meanwhile, the pound strengthened versus the euro after the Eurozone purchasing managers’ index dropped to 42.1 in December, its lowest since the survey began a decade ago.

Gains for the pound also came amid speculation that the UK economy will recover more quickly than the Eurozone’s economy due to the Bank of England’s more aggressive interest rate cuts.

The pound was trading at 90.8p to the euro while it also gained on the yen as it took ¥139.5652 to buy a pound.

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