* Weak Germany PMI fans ECB rate cut speculation
* Slower China manufacturing growth helps yen recover
* Dollar volatile vs yen on bogus AP White House blasts
NEW YORK, April 23 (Reuters) - The euro dropped to a
two-week low against the dollar on Tuesday as weak German data
raised concerns about the health of the euro zone economy and
revived speculation that the European Central Bank could cut
The yen saw brief volatility after an Associated Press
tweet, quickly shot down as bogus, saying there were two
explosions at the White House. However, after it
was denied and the tweet was blamed on hackers, traders quickly
"That was an algorithmic move, directly related to the
selloff in equity futures," said Lane Newman, director of
foreign-exchange trading, ING Capital Markets, New York. "No
humans touched the machines unless they had orders to execute."
The euro fell as low as $1.2971 and market watchers
say it may break decisively out of the $1.30-to-$1.32 range that
has held for the past few weeks. It was last trading 0.5 percent
lower on the day at $1.2998.
A survey showed Germany's private sector shrank for the
first time in five months in April, overshadowing improvements
in French economic data. The U.S. manufacturing sector was far
from upbeat and, taken with China's soft factory growth numbers
for April, the reports fueled concerns about a global slowdown.
"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."
Comments on Monday from policymakers about slowing inflation
and weak growth prospects in the euro zone suggested the ECB 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 toward chart support at its
200-day moving average around $1.2936 and the early April low of
Investments in Edinburgh, said the euro zone single currency
should be significantly lower. Standard has had a short euro
position for some time.
"A rate between $1.10 and $1.20 is reasonable over the next
three or four quarters."
But the euro jumped to a one-month high against the Swiss
franc, with several traders citing speculation the
Swiss National Bank could raise the floor for the currency
pair's movements. It last traded at 1.2285 francs, up 0.7
percent on the day.
The SNB imposed an exchange rate cap at 1.20 francs per euro
in September 2011, meaning it would not tolerate a euro/Swiss
Franc rate below 1.20. There has been sporadic talk among
traders ever since suggesting that the cap could be moved
higher, to 1.25 francs. The SNB said it had no comment.
The euro fell 0.3 percent to 129.22 yen, still
down from its April 11 three-year peak around 131.10 yen.
The yen, which typically rises as investors seek safety
during times of heightened concern about the global economy,
The dollar last traded up 0.3 percent at 99.45 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
Some US$4.26 billion in euros changed hands on Tuesday
compared with $4.789 billion the same day a week ago.,
using Reuters Dealing data. US$3.14 billion in yen changed
hands, compared with US$3.94 billion a week ago.