By: Barbara Zigah
Following yesterday’s Sarkozy/Merkel summit which failed to yield any promise of the creation of a Eurozone bond scheme, the Euro sank against the U.S. Dollar. Also hurting the common currency was unexpectedly weak German GDP data, which clearly precipitated the later reported decline in Eurozone GDP. The Euro fell by 0.2% against the greenback, and met major resistance around the $1.4470 - $14480 area, though found support above yesterday’s intraday low of $1.4355. As reported at 12:28 p.m. (JST) in Tokyo, the Euro was trading at $1.4376, a decline of 0.2%.
As to whether or not the Euro could fall further against the U.S. Dollar is questionable; according to one senior analyst in Japan the dire state of the greenback doesn’t make it that attractive, either.
Yesterday’s meeting between the French and German policymakers unveiled plans for closer integration of the Eurozone members, but any near-term consideration of a joint Eurozone bond is not included among the plans, as both Merkel and Sarkozy don’t believe it’s a viable option given the current economic state of the Eurozone. That stance left the Euro open to further attacks, as many experts firmly believe that a joint Eurobond scheme is the only way of ensuring “affordable” financing, especially for those fiscally troubled sovereign nations.