Forex News
The common currency Euro struck a 2-week trough against the safe haven currencies in Asian trading today as an emergency meeting looms for Eurozone policy makers, with the focus on peripheral contagion worries in Italy.
In response to the latest nonfarm payroll report, US stock futures fell sharply, expunging most of this week’s gains, and dashing hopes of a forthcoming economic recovery.
The Euro appears to be giving back the gains it made yesterday against the U.S. Dollar following the news of a Eurozone interest rate hike. As widely expected by markets and analysts alike, the ECB announced a .25% increase in their benchmark interest rates.
As the markets anticipate that the ECB will move to widen the rate differential between it and the Federal Reserve, the Euro continues to struggle to regain some of last week’s momentum.
Moody’s, the credit ratings agency, has followed through on earlier threats and downgraded Portuguese debt to junk status. The reverberations were immediately felt in the financial markets as fear of contagion spread.
In Asian trading today, the common currency Euro retreated after a 6-day win streak as investors bought back the U.S. Dollar to cover short positions.
The Euro continues to extend last week’s gains; in Sydney, the common currency earlier struck a 1-month peak against the U.S. Dollar on easing concerns over Greek debt.
With the euphoria of the Greek vote for austerity ebbing, the common currency’s rally appears to be losing some momentum. As reported at 2:34 p.m. (JST) in Tokyo, the Euro was trading against the U.S. Dollar at $1.4514, a gain of 0.1% from late trade in New York but retreating from the $1.4539 peak at the height of investor jubilation yesterday. Where the Euro was earlier finding support was from Asian central bankers who bought heavily after profit taking pushed the common currency down to $1.4467.
Yesterday’s passage of new austerity measures through the Greek Parliament helped to push the Euro to a 3-week high against the U.S. dollar. That leaves one last hurdle for the Greek government to jump, namely today’s implementation vote.
In spite of the public protests and violence which erupted yesterday on the streets of Athens, investors appear confident that the Greek Parliamentary vote needed to push through additional austerity measures will pass. That sentiment is helping to boost the Euro against the U.S. Dollar, and also giving a lift to Asian equities during the Asian trading session.
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