The euro plunged to a three-week low against the dollar and sank against the yen on Thursday after data showed a dour picture of the euro zone economy, raising speculation the European Central Bank will cut interest rates, Reuters reported.
The yen came off recent multi-year lows against the dollar as investors remained cautious a day ahead of a meeting of Group of 20 finance officials where exchange rates are expected to be an important topic, with a particular focus on the yen’s recent weakness.
The euro fell for the first time in four sessions against the dollar after the European Union reported that the euro zone’s economy shrunk by 0.6 per cent in the last three months of 2012, a steeper decline than the 0.4 per cent drop forecast in a Reuters poll.
The economies of German and France, the two largest economies of the 17-nation euro zone, also shrank by more than expected in the final quarter, casting doubt on forecasts of a recovery in early 2013.