Investing.com - The euro fell to two year lows against the dollar on Wednesday, as investors looked ahead to the outcome of Thursday’s European Central Bank meeting amid heightened expectations for additional stimulus measures.
EUR/USD touched lows of 1.2323, the weakest since August 2012 and was last down 0.37% to 1.2338.
Surveys of business activity across the euro zone on Wednesday indicated that the region would post only marginal economic growth in the fourth quarter.
Research group Markit reported that its composite purchasing managers’ index, which covers the manufacturing and service sectors across the currency bloc, fell to 51.1 last month from 52.1 in October.
“The region is on course to see a mere 0.1% GDP growth in the final quarter of the year, with a strong likelihood of the near-stagnation turning to renewed contraction in the new year unless demand shows signs of reviving,” Chris Williamson, chief economist at Markit said.
Germany’s services PMI fell to a 16-month low of 52.1 in November, while the composite PMI dropped to a 17-month low of 51.7 from 53.9 in October.
The French composite PMI dropped to a nine month low of 47.9 from 48.2 in October, well below the 50 level that separates expansion from contraction.
A separate report showed that euro zone retail sales rose by a smaller-than-forecast 0.4% in October and were 1.4% higher on a year-over-year basis.
The weak data added to pressure on the ECB to step up measures to spur growth and combat persistently low levels of inflation in the region.
The annual rate of euro area inflation slowed to a five year low of 0.3% in November, down from 0.4% in October and well below the ECB’s 2% target.
The euro was also weaker against the yen, with EUR/JPY down 0.34% to 147.15.
The U.S. dollar index, which measures the greenback against a basket of six major currencies, was up 0.21% to 88.89, the strongest level since March 2009.