Euro down as German economic sentiment hits lowest level in 12 months

On Tuesday the euro fell from three-week highs against the dollar after data showed that German economic sentiment hit the lowest level in a year this month.

EUR/USD was last at 1.1387, down from highs of 1.1410 ahead of the report.

EUR/GBP was last at 0.7465 from 0.7470.

The ZEW Centre for Economic Research reported that its index of German economic sentiment fell to 1.9 this month from 12.1 in September, far below economists' forecasts for a reading of 6.0. Septrember thus marked the sixth consecutive monthly decline.

A separate index, measuring current conditions dipped to 55.2 from 67.5 points in September, compared to expectations for a fall to 64.7.

The Volkswagen diesel emissions scandal and economic problems in emerging markets have become a poisonous cocktail for confidence in Germany.

“The weakening economic development in emerging markets dampens the economic outlook for Germany’s export-oriented economy,” ZEW President Clemens Fuest said in a statement.

“While economic growth in the second quarter was largely driven by external demand, it is becoming less likely that exports will stimulate growth in the near future.”

The soft German data came against the backdrop of a steep fall in Chinese imports last month, driving fresh worries over slowing global growth.

Official data released earlier Tuesday showed that Chinese imports tumbled 20.4% in September on a year-over-year basis, the eleventh straight monthly decline. Exports fell by a smaller than forecast 3.7% from a year earlier, resulting in a trade surplus of $60.34 billion.