The dollar paused Tuesday, as alarming economic news from Europe failed to help the resurgent greenback extend yesterday’s multi-year highs.
In a report that may finally compel the European Central Bank to offer fresh stimulus, the European Commission lowered the euro area growth forecast for 2015 to 1.1 percent from 1.7 percent predicted in May.
The outlook for this year has been cut to 0.8 percent from 1.2 percent.
The ECB has thus far resisted full-blown quantitative easing due to concerns about inflation, but the anemic growth projections may be too dire to ignore.
On Friday, the Bank of Japan surprised markets with a massive injection of cash, and the ECB may follow suit before year’s end.
Meanwhile, the Federal Reserve is seen raising interest rates sometime in the first half of 2015.
The dollar was stuck at $1.25 versus the euro, having touched a new 2-year peak near $1.24 on Monday.
Modest declines took the dollar to Y113.50 versus the yen, down a bit from a near 7-year peak above Y114.
The buck eased a bit versus the sterling to near $1.61, paring weekly gains.
In today’s economic news, the U.S. trade deficit widened by much more than anticipated to $43 billion in the month of September as exports fell.
New orders for U.S. manufactured goods fell in line with economist estimates in the month of September, according to a report released by the Commerce Department on Tuesday.
The report said factory orders fell by 0.6 percent in September after tumbling by 10.0 percent in August.