Euro Declines as ECB’s Mersch Says Risks to Growth Increase
The euro fell the most in a month against the dollar after European Central Bank council member Yves Mersch cited “downside risks'’ to the region’s economic growth.Traders sold euros as the comments fueled speculation the ECB will join the Federal Reserve in cutting interest rates this year. Yesterday, the euro rose to within one U.S. cent of a record high as traders bet the ECB would hold rates steady or even lift borrowing costs to control inflation.
“Mersch’s comment is a wake-up call,'’ said Paresh Upadhyaya, who helps manage $29 billion in currency assets at Putnam Investments LLC in Boston. “It does raise the chance for a rate cut from the ECB; the market was so complacent with the view that the euro is bulletproof.'’ Read more from Bloomberg.