NEW YORK (Reuters) - The euro dipped on Thursday as weak German economic data and a report that Italy would slash its growth forecasts prompted fears about weakening growth in the region.
German industrial orders fell by the sharpest rate in more than two years in February as they were hit by a slump in foreign demand, compounding worries that Europe’s largest economy had a weak start to the year.
“I’m a little bit surprised we didn’t get more reaction on the back of the German factory orders data, which really suggests that we’re not seeing a significant pickup in the industrial sector after a pretty soft second half to last year,” said Shaun Osborne, chief FX strategist at Scotiabank in Toronto.
Sentiment at major exporting countries including Germany, South Korea and China has been deteriorating, Osborne said.
“I have to wonder if there isn’t an underlying concern here that reflects worries about where global trade is going on the back of the tariff discussions, or if it’s perhaps more of a sign that there is a more meaningful slowdown in the global economy just around the corner,” Osborne said.
Reuters also reported that Italy this month will probably cut its 2019 economic growth forecast to 0.3 percent or 0.4 percent and raise the budget deficit target to around 2.3 percent of gross domestic product.
The single currency fell 0.15% against the greenback to $1.1217.
The euro is nearing the $1.1174 level reached on March 7, which if broken would send the currency to its weakest levels since June 2017.
Investors are focussed on trade discussions between the United States and China on the hope that an agreement will remove headwinds to global growth.
U.S. President Donald Trump said on Thursday that trade talks with China were going well and he would only accept a “great” deal as negotiators hammered out differences ahead of a meeting between Trump and China’s vice premier later in the day.
The next U.S. economic focus will be Friday’s employment report for March.
Sterling fell as concerns grew that Britain may be headed for a protracted Brexit delay.
Editing by Bernadette Baum and Diane Craft