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Euro hits six-month low vs US dollar
[NEW YORK] The euro sank to a six-month low against the dollar on Tuesday as investors bet the Federal Reserve will raise interest rates next month, while its eurozone counterpart mulls further easing.
"Dollar bulls have re-emerged on expectations of a December rate hike from the Fed when all other central banks, including the Bank of England, aren't even on the tightening spectrum," said market analyst Jasper Lawler at CMC Markets UK The euro was under pressure from remarks by Erkki Liikanen, a member of the European Central Bank's governing council.
"ECB member Liikanen said that the central band stands ready and willing to act, firming speculation that a cut in the deposit rate is in the works for December," XE Market Analysis said in a blog.
The euro fell to US$1.0675, its lowest level since late April. It recovered to US$1.0727 around 2200 GMT, down from US$1.0748 at the same time on Monday.
Kathy Lien of BK Asset Management said that investors were preparing for dovish comments from ECB President Mario Draghi on Wednesday.
"If he doesn't waver from his recent comments, we could see the EUR/USD drop below the April spike lows near 1.0660 and make its way towards 1.05," she said.