German Auction Scare Weighs on Euro

Barbara Zigah

By: Barbara Zigah

The Euro continues to suffer the aftershocks created when Germany’s sovereign bond auction failed to sell out, suggesting that investors are now beginning to worry that Germany will not be immune to the fiscal dangers suffered by other E.U. members. In Asian trading, the Euro held close to a 7-week low against the U.S. Dollar, following yesterday’s steep fall. As reported at 11:29 a.m. (JST) in Tokyo, the Euro was trading at $1.3377, following yesterday’s better than 1% loss when it declined to $1.3320. Against the Japanese Yen, the Euro struck a 6-week trough, trading at 102.90 Yen.

Analysts believe that with Germany now having to pay higher prices for its debt, that there is little likelihood that it could help the Eurozone as a whole. Should bond yields rise further, some say that it could trigger a Eurozone breakup, though others hold that it may force Germany to finally back the push for the ECB to assume the role of lender of last resort and agree to unlimited purchases of sovereign debt. The German bond sale saw the worst participation level since the Euro launch, failing to sell some 39% of its offering.

Barbara Zigah

After working on Wall Street, Barb began her second career as a freelance writer at Daily Forex, where the CEO recognized fresh, untapped potential and was willing to give her a try. She’s never looked back. Since then, she’s worked steadily as a freelance writer and editor in the financial services and Forex-related industry.

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