By: Barbara Zigah

The Euro slipped close to a 9-month low against the U.S. Dollar as new-found fear grips investors worried that Greece is imminently about to default on its sovereign debt. In earlier Asian trading, the Euro had fallen to a low of $1.3163 before regaining some ground, trading at $1.3207.Over the weekend, the Greek finance minister cautioned markets that the country would not meet deficit targets in spite of the implementation of new austerity measures. Finance ministers from the Eurozone are reconsidering private sector involvement in the second Greek bailout package; if the package is reduced, the potentiality of a Greek default rises tremendously.

The finance ministers also decided to cancel their October meeting, which means that the Greek government will experience a delay in receipt of the next tranche payment. One senior strategist in Tokyo sees the move as a sign that the finance ministers are discussing an orderly default.

Growth fears in China, seen as the driver of the worlds’ various economies, are also weighing heavily on the currency markets with higher risk currencies under significant pressure; the Australian Dollar earlier fell to a 1-year low against the greenback with risk averse investors pulling their funds out of all commodity-linked currencies. The AUD/USD pair slipped to $0.9454, a 1-year low.

The U.S. Dollar Index, which gauges the strength of the greenback against a weighted basket of currencies, including the Euro, has also been pushed to a 9-month high.