Euro dips as weak German data prompts growth concerns

NEW YORK: 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 0.19pc against the greenback to $1.1213.

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 focused on trade discussions between the United States and China on the hope that an agreement will remove headwinds to global growth.

After making "good headway" last week in Beijing, the two sides aim to bridge differences during talks that could extend beyond three days this week, White House economic adviser Larry Kudlow said.

The next US 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.