The dollar strengthened against the euro following the release of German industrial-production data for the month of August, which showed a sharp decline of 1.2%.

The drop confounded forecasters: The consensus estimate had called for a 0.2% increase, according to a poll carried out by Reuters. It also reverses direction from July, when Bloomberg had announced, "German Industrial Production Rebounds in Sign of Solid Recovery." Of course, that was before global markets were dragged through a very painful month of August.

The state of order books doesn't suggest an imminent rebound, either. Industrial order books fell by 1.8%, compounding a 2.2% drop in July.

Germany is the eurozone's largest economy and its largest exporter. As such, the August data does nothing to encourage investors to maintain their exposure to Europe.

Furthermore, the fragility of economic activity demonstrated in the report raises the odds that the European Central Bank (ECB) could boost its quantitative easing program in an effort to spur demand. Quantitative easing, in which a central bank buys securities (governments bonds, typically), is widely perceived as degrading the value of a currency.

However, the fact is that the eurozone was not behind German industry's woes: Orders from eurozone trading partners rose 2.5%. Would an increase in bond-buying by the ECB improve on that result?

The EUR/USD rate (CURRENCY: EURUSD) was quoted at $1.1255 at 3:10 p.m. EDT, down 0.2% (i.e., the dollar strengthened on the day, as the rate is quoted in dollars). The dollar is also higher against the Swiss Franc (the USD/CHF (CURRENCY: USDCHF) is up 0.54% to 0.9727 CHF) but lower against the British pound (the GBP/USD (CURRENCY: GBPUSD) is up 0.58% to $1.532).

Rigging your way out of a job
On the topic of currencies, Bloomberg had an interesting piece yesterday evening highlighting "four ways currency rigging transformed the $5.3 trillion market."

Just as a laundry list of new regulations have fundamentally changed the bond market in the aftermath of the credit crisis, a scandal concerning price manipulation by dealing banks in the foreign exchange market (the world's largest asset market) is also having a big impact.

The upshot is that foreign exchange staff have become a lot more circumspect -- and that goes for those who still have a job. It seems increased automated trading is another trend.