By: Barbara Zigah
As the European equity markets open higher for trading, the common currency is also higher against the U.S. Dollar, trading most recently at 1.4236, but is still viewed as vulnerable to selling pressure as investors worry that the Eurozone’s fiscal crisis may be spreading to France. Those worries became clear yesterday, when shares in French banks took a nosedive, sending global equity markets lower. The nosedive was precipitated by an unsubstantiated rumor, said now to be spread by speculators, that France’s AAA credit rating was under review.
The U.S. Dollar also remains on the defensive, with investors hesitant to hold or open long positions in the greenback now that the Federal Reserve Bank has pledged to hold their benchmark rate at 0.25% for the next two years. Also putting pressure on the U.S. currency was the earlier fixing of the Chinese Yuan’s reference rate.
Heavily affected by the ongoing Eurozone and U.S. concerns are the safe-haven currencies, the Swiss Franc and the Japanese Yen. Yesterday, the Swiss National Bank interceded for the second time in a single week, but the central bank’s success is expected to be short lived given the global turmoil. As reported at 8:30 a.m. (BST) in London, the U.S. Dollar was up against the Swiss Franc, trading at 0.7272 Swiss Francs. The Euro is also higher against the Swiss Franc, trading at 1.0399 Swiss Francs.