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The euro fell against most of its major peers as data showed producer prices in Germany rose faster than forecast, fueling concern that policy makers will have to raise interest rates, stifling the economic recovery.
The euro declined against the dollar and the yen ahead of German elections beginning on Feb. 20 that will test voter appetite for supporting weaker euro-region nations. Producer prices in Europe’s largest economy jumped 1.2 percent from December, twice the 0.6 percent median estimate of economists.
“The euro’s recent rebound is running out of steam,” said Ian Stannard, a senior currency strategist at BNP Paribas SA in London. “The market is getting uncomfortable with inflation headlines although we think the ECB may not be able to do much given the problem in the peripheral countries. The elections will add further uncertainty to the debt crisis debate.”
The pound rose against the euro and the dollar amid speculation that inflation may soon force policy makers to raise interest rates.
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