Dollar increases against the euro

The dollar has climbed back to a six-month high against the euro, as continuing fears about the European economy hit the single currency.

With a key German business sentiment survey posting its worst reading in three years, the euro fell as low as $1.4571 in Tuesday trading.

Data showing that the German economy contracted from April to June, also increased European recession fears.

Meanwhile, the pound fell to $1.8331, its lowest point since July 2006.

Deteriorating outlook

“The German [business confidence] number suggests that the risk of a full-blown recession in Germany is rising as the last time the number plunged to this level, Germany was in recession,” said analyst Dustin Reid of ABN AMRO in Chicago.

The US currency has benefited as the economic outlook has darkened in both mainland Europe and the UK.

Investment guru Warren Buffett said last week that he had no bets against the dollar – underscoring the currency’s strength. The fall in the euro and sterling could help European exporters whose goods will now be cheaper overseas.

But it will hurt holidaymakers who have benefited from a strong pound when travelling to countries which use the dollar.

While the dollar resumed its rises on Tuesday, oil prices fell.

US light crude was down 67 cents to $114.44, while London’s Brent fell 64 cents to $113.39.