Tuesday’s meeting between Merkel and Sarkozy in spotlight
By Polya Lesova, MarketWatch
LONDON (MarketWatch) — The euro dropped against the U.S. dollar Tuesday after disappointing second-quarter-growth data from the euro zone and ahead of a closely watched meeting between the leaders of France and Germany.
The euro EURUSD -0.26% slipped to $1.4368 at midday London trading, compared with $1.4453 in late North American trading on Monday.
The decline followed data showing the euro-zone gross domestic product rose 0.2% in the second quarter from the preceding three months, after growing 0.8% in the first quarter. Read more about the European economic data.
Germany’s GDP edged up 0.1% in the April-June quarter, slowing sharply from the 1.3% growth posted in the first quarter.
“The release of far-weaker-than-expected German GDP data this morning has taken the wind out of the euro’s sails,” said Jane Foley, senior currency strategist at Rabobank International in London.
Currency traders are awaiting the meeting in Paris between German Chancellor Angela Merkel and French President Nicolas Sarkozy, which will be followed by a news conference expected around 12:30 p.m. Eastern time. The Wall Street Journal reported, citing a spokeswoman for Sarkozy, that eurobonds are not on the agenda for the summit.
“Merkel and Sarkozy’s meeting is capturing the imagination of the market even though both sides seem to throw cold water on the idea of a European bond,” said analysts at Brown Brothers Harriman in a note.
The dollar index DXY +0.21% , which tracks the performance of the greenback against a basket of other major currencies, rose 0.3% to 74.116.
The British pound was little changed at $1.6381, showing little reaction to U.K. inflation data. Meanwhile, the dollar slipped 0.2% against the Japanese currency to 76.73 yen.
