* Weak Germany PMI fans ECB rate cut speculation
* Slower China manufacturing growth helps yen recover
* Australian dollar falls to 6-week low vs U.S. dollar
By Gertrude Chavez-Dreyfuss
NEW YORK, April 23 (Reuters) - The euro dropped to a
two-week low against the dollar on Tuesday after weak German
data raised concerns about the health of the euro zone economy,
reviving speculation that the European Central Bank could cut
A survey showed Germany's private sector shrank for the
first time in five months in April, overshadowing improvements
in French data. The U.S. manufacturing sector was also far from
upbeat and along with soft Chinese factory growth numbers in
April, the reports overall fueled concerns about a global
The data also boosted the yen and drove the commodity-linked
Australian dollar to a six-week low against the U.S. dollar.
"Given the deteriorating fundamentals in the euro zone, the
prospect of (an ECB rate cut) has certainly increased," said
Boris Schlossberg, managing director of FX strategy at BK Asset
Management in New York. "A rate cut would be the quickest and
least expensive policy course."
The euro fell as low as $1.2971 and could break
decisively out of the $1.30 to $1.32 range that has held for the
past couple of weeks. It was last down 0.4 percent on the day at
Comments on Monday from ECB policymakers about falling
inflation and poor growth prospects in the euro zone suggested
the central bank may be leaning toward a cut in its main
refinancing rate, which stands at a record low 0.75 percent.
More losses could push the euro towards chart support at its
200-day moving average around $1.2936 and the early April low of
Investments in Edinburgh, said the single currency should be
significantly lower. Standard has had a short euro position for
"A rate between $1.10 and $1.20 is reasonable over the next
three or four quarters."
The euro, however, jumped to a one-month high of 1.2271
francs, with several traders citing speculation the
Swiss National Bank could raise the floor for the currency
It last traded at 1.2266, up 0.5 percent.
The SNB in September 2011 imposed an exchange rate cap at
1.20 francs per euro, meaning it would not tolerate a euro/Swiss
Franc rate below 1.20. Talk among traders suggested that the cap
could be moved higher, to 1.25 francs.
The SNB said it had no comment.
The euro fell 0.9 percent to 129.38 yen, moving
further away from its April 11 three-year peak around 131.10
The yen, which typically rises as investors seek safety
during times of heightened concern about the global economy,
recovered broadly, with the dollar last down 0.2 percent
at 99.42 yen.
The dollar has faced stiff resistance at the 100 yen level,
having stalled at a four-year high of 99.95 yen earlier this
month, but most analysts and traders still believe it is on
track to scale this peak.
Strategists said the yen could take its cue from the next
batch of Japanese capital flows data due on Thursday. A focal
point for the yen is whether the BoJ's aggressive monetary
easing will prompt Japanese investors to increase their
purchases of higher-yielding overseas assets.
The following day, investors will look to the BoJ's policy
meeting for clarity on how policymakers intend to implement the
"We believe Governor (Haruhiko) Kuroda has left a fairly
strong impression that he has done all he can on the policy
front at this stage," wrote Bank of America Merrill Lynch in a
"If the 2 percent inflation target can be achieved under the
current framework, then it makes sense that further measures are
The dip in the Chinese manufacturing data and falls in
commodity prices pushed the Australian dollar to a
6-week low of $1.0221. It also lost around 1 percent against the