Euro Skids as Sentiment Deteriorates

The Euro slipped broadly in the Asian trading session, striking a 1-week trough against the U.S. Dollar as risk appetite waned on worries over the global growth slowdown coupled with a rise in Spanish borrowing costs following the ratings downgrade of Spain’s five regions. As reported 1:42 p.m. (JST) in Tokyo, the EUR/USD pair was trading at $1.2982, a loss of 0.7% on the day but recovering from the earlier low of $1.2950. Over the past five weeks, the pair has been trading within a tight trading band of $1.28 to $1.3170, and analysts believe that any upside gains are limited.

In the U.S., Wall Street tumbled hard as unexpectedly poor earnings reports from several multinational firms, including those from DuPont and Apple triggered the slide; in the end, the Dow Jones fell some 243 points, the worst 1-day decline in nearly four months. The SPX500 and the NASDAQ also were markedly lower, pointing to investors that global growth worries remain valid.

Besides the downgrade of Spain’s regions, there was other Euro-centric news which cast a pall on sentiment; data confirmed that sentiment among France’s manufacturing sector fell to its lowest level in more than two years, raising concerns that growth in the second largest Eurozone economy is faltering.