Investing.com -- The euro was hovering just above its new low for 2019 against the dollar in early trading on Friday, as concerns over growth and inflation kept the single currency on the defensive, as did a fresh wave of fear about a disorderly Brexit at the end of next month.
Meanwhile, the British pound fell around half a cent against the dollar and a little less against the euro after Michael Saunders, the chief hawk on the Bank of England’s Monetary Policy Council, said persistently high economic uncertainty warranted lower interest rates. He added the caveat that a no-deal Brexit may make this impossible.
The falls in the euro and sterling this week has driven the dollar index to its highest in three weeks. At 3:45 AM ET (0745 GMT), it was at 98.917, down a shade from an overnight high of 98.958.
The euro fell as low as $1.0905 overnight during Asian hours and is now down 4.6% against the dollar year-to-date, the worst performing of all major currencies. By 3:45 AM, it was at $1.0922, little changed from late Thursday levels.
Analysts at Landesbank Hessen-Thueringen said in a note Friday that if the recent double-bottom formation at $1.0925 is convincingly broken, then the euro could settle into a trading range between $1.0870-$1.0970.
Fresh data Friday morning underlined the continuing disinflationary pressure coming from the depreciation of the yuan and from falling oil prices. German import prices, an advance indicator of broader inflationary trends, fell 0.6% in August, much more than the 0.3% forecast, taking the year-on-year drop to 2.7% from 2.1% in July. French consumer inflation data also came in below expectations.
The numbers come barely a day after Sabine Lautenschlaeger resigned her board position at the European Central Bank, a move that some said was motivated by opposition to President Mario Draghi’s decision to restart quantitative easing in November. Lautenschlaeger herself hasn’t been that explicit about the reasons for her departure. In addition, the ECB’s chief economist Philip Lane hinted that the bank still has space for further monetary easing when its new President Christine Lagarde takes over in November.