* Australian dollar sheds 1 pct after softer CPI
* Sterling at two-month lows as dollar and Brexit weigh
(Updates market action, adds analyst's comment)
By Saqib Iqbal Ahmed
NEW YORK, April 24 (Reuters) - The euro slumped to a 22-month low
against the U.S. dollar on Wednesday after a surprise drop in a
leading indicator for economic activity in Germany highlighted the
divergence between economic data in the United States and the euro zone.
German business morale deteriorated in April, bucking expectations
for a small improvement, as trade tensions hurt the industrial engine
of Europe's largest economy.
The euro fell 0.68% to $1.1149, its lowest since June 2017. The
common currency was on pace for its worst one-day fall in about seven weeks.
"The broader importance of the German data is that market
participants had been hoping that the rebound in Chinese monetary
conditions, in lending in China, would help to boost demand for German
exports and would lift spirits in the euro zone's core
economies," said Karl Schamotta, director of foreign exchange
strategy and structured products at Cambridge Global Payments.
"We are seeing successive prints that show that Germans are
not necessarily turning more positive here," said Schamotta.
The greenback has fared well in recent weeks supported by upbeat
"The dollar is winning the reverse beauty contest," said Schamotta.
"It's not necessarily that fundamentals of the U.S. are
improving dramatically or anything like that, but in relative terms
U.S. markets are looking like attractive places to park capital,"
The dollar index , which measures the U.S. currency versus a
basket of six major rivals, was up 0.49% at 98.119, its highest since
Investors will watch the release on Friday of U.S. gross domestic
product data for the first three months of 2019, for signs of whether
the United States remains stronger than other leading economies.
The dollar was 0.38% higher against the Japanese yen, ahead of the
conclusion on Thursday of a two-day rate review meeting where the
Japanese central bank is widely expected to keep monetary policy
On Wednesday, the Australian dollar fell 1.25% after
weaker-than-expected Australian inflation numbers heightened the
prospect of an interest rate cut.
Latin American currencies broadly softened against a robust
dollar, with the Argentina's peso slid to its lowest level in more
than two weeks.
The pound held at a two-month low weighed down by the strong
dollar and fading hopes of a breakthrough in Brexit talks between the
British government and the opposition.
The Canadian dollar weakened against its U.S. counterpart to its
lowest in nearly four months, as investors raised bets on a Bank of
Canada interest rate cut this year after the central bank slashed its
economic growth outlook.
GRAPHIC-Euro vs U.S. dollar GRAPHIC-World FX rates in 2019
(Reporting by Saqib Iqbal Ahmed; Editing by Lisa Shumaker)
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