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German data weighs on dollar

grid, data, money, dollarThe Australian dollar is slightly lower after weak German economic data weighed on market confidence.

At 0700 AEDT on Tuesday, the local unit was trading at 88.05 US cents, down from 88.16 cents on Monday.

Caution crept into markets after the Ifo index of German business confidence fell for the sixth month in a row to a near two year low in October, a gloomy sign for the struggling European economy.

BK Asset Management MD, Boris Schlossberg, said financial markets had started the week in a cautious mood.

“Currencies were relatively placid on the first trading day of the week despite a flurry of news over the weekend following the release of the European Central Bank stress tests for the banks,” he said.

“IFO chief economist, Wohlrabe, noted that there were almost no bright spots in the German economy now.”

Less than one in five euro zone banks failed a financial stress test aimed at preventing a repeat of the global financial crisis, the ECB said.

The main focus for markets this week will be an announcement early on Thursday morning, Australian time, by the US Federal Reserve after its two day policy meeting.

Traders will be looking for any clues on the the timing of a Fed’s interest rate hike, which is expected some time in 2015.

AAP

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