TOKYO, Feb 17 — The euro was on the back foot today, as concerns mounted about weakening economic growth in Europe at a time financial markets and policymakers fret about a new threat to the global economy from a fast spreading coronavirus in China.
The euro, which hit a 33-month low of US$1.0817 on Friday, fetched US$1.08385 in early Asian trade today, flat so far on the day but down 2.3 per cent since the start of month.
“Coronavirus is increasingly looking like a long-term issue and thus, at least for currency markets, it will be playing second fiddle,” said Kyosuke Suzuki, manager of currencies at Societe Generale.
“In contrast, sentiment on the euro is becoming clearer, with weak economic fundamentals helping to push it down,” said Kyosuke Suzuki, manager of currencies at Societe Generale.
The German economy stagnated in the fourth quarter due to weaker private consumption and state spending, data showed on Friday, renewing fears of a recession at a time Chancellor Angela Merkel's conservatives are preoccupied with a search for a new leader.
Europe's biggest economy posted zero growth from the previous quarter while separate data showed euro zone gross domestic product grew 0.1 per cent quarter-on-quarter in the fourth quarter, in line with forecasts but the weakest since 2014.
Most market players expect stronger growth in the United States although data published on Friday provided a mixed picture.
US core retail sales was flat last month, lagging expectations of 0.3 per cent growth while its rise in December as revised down to 0.2 per cent from a previously reported 0.5 per cent.
Industrial production also shrank more than expected by 0.3 per cent.
Still, economists have blamed one-off factors such as warm weather and output suspensions stemming from troubles at Boeing for the downbeat numbers.
The US dollar index stood at 99.131, near Friday's 4½-month high of 99.241.
Japan's economy was also under increasing strain, with GDP figures released on Monday coming in far below economist' forecasts, hitting Tokyo shares even though reaction in the currency market was muted.
The world's third-largest economy shrank 1.6 per cent in the three months to December, the largest drop in six years, hit by sales tax hike.
The yen stood at 109.81 yen per US dollar, little moved in a tight range for more than a week.
The Australian dollar held firm as investors assessed the latest reading on coronavirus cases in China's Hubei Province, the epicentre of the outbreak.
The province reported 1,933 new cases, up slightly from the previous day, bringing the total so far to more than 58,000, but the number of new deaths fell to 100 from 139.
The Australian dollar fetched US$0.67155. The currency, which is used as a proxy for risk on Chinese assets because of Australia's high trade exposure to the Asian giant, has partly been supported by expectations of stimulus from Beijing.
The offshore yuan was also slightly higher at 6.9857 yuan per US dollar. — Reuters