Dollar advances on German recession fears

The dollar has surged against the majority of its forex trading peers today (October 15th), as investors prepare for two speeches from European Central Bank (ECB) president Mario Draghi. 

This comes at a time of stark contrast between the economic fortunes of the US and Germany, the eurozone's largest economy, with data published yesterday indicating the country may be heading back towards recession.

Berlin's Economy Ministry has cut its gross domestic product (GDP) growth forecast for the full year 2014 from 1.8 per cent to 1.2 per cent, while it now expects an advance of just 1.3 per cent next year, compared to its previous estimate of two per cent. 

In addition, the ZEW Centre for European Economic Research revealed its index of investor and analyst expectations has declined for a tenth successive month in October, reaching its lowest level since December 2012. The organisation's president Clemens Fuest refused to rule out the possibility the nation could enter a technical recession.

Mr Draghi is due to give a speech in Frankfurt later today and is expected to elaborate further on his October 11th comments that the bank will use further unconventional monetary policy methods if required to sustain the eurozone's recovery.

The bank has already introduced a negative deposit rate, provided cheap finance to banks across the region and detailed a scheme to purchase asset-backed securities.

Later in the session, the Federal Reserve is due to publish its Beige Book, which details US economic conditions. According to the consensus estimate, this will show the bank expects GDP growth of 2.2 per cent this year, rising to three per cent in 2015.

As of 11:35 BST, the euro was trading down by 0.11 per cent versus the greenback at 1.2644. 

Meanwhile, sterling continued to trade around a one-month low after it was revealed UK inflation slowed by more than anticipated in September, further easing pressure on the Bank of England to lift interest rates.