Posted December 01, 2010
Irish bailout continues to push euro lower. Fears spread.
During the Monday currency trading session, the US dollar continued its steps upward as the euro continued to fall. The euro fell to two month lows against the US dollar. All of this stems primarily from the weak spots in the European Union. There was news that the European Union approved a $122.5 billion bailout package for Ireland, who continues to struggle under the weight of its debt.
The euro moved from US $1.3222 during trading on Friday in North America to US $1.3121. However, during the currency trading day, it feel below US $1.31. It lost about 1.2 percent during the day, reaching the lowest level it has been at since September 2010.
The US Dollar
The US dollar continued to climb due in part to the perceived safety of the currency. The US dollar index moved the currency from 80.378 as of close of trading on Friday in North America to 80.797 by the end of Monday's trading session.
The US dollar continues to benefit from the risk avoiding investors. During the day, US stocks fell as did those in Europe. Most types of investors were worried about the risks associated with Spanish and Portuguese debt. Bond holders pulled away from these investments as a decision to reduce the proposal to make bondholders accountable for some of the cost of future sovereign rescue attempts. The bailout, which is estimated at Euro 85 billion, was what most in the market expected it to be. However, there is still concern that the Irish prime minister will struggle to pass the year's budget. Ireland's deficit is seen to be more than 11 percent of the country's GDP this year, which excludes the bailing out of the country's financial systems.
These reports did not indicate any type of improvement for the issue of Spain and Portugal's debt concerns, both of which are holding back the euro's ability to move forward.
The US dollar moved up from Y 84.02 on Friday to trade at Y 84.25 by the end of trading on Monday. The euro traded 0.7 percent lower against the yen.
The UK pound moved down against the US dollar, as euro zone concerns continued to hamper the European Union nations. The UK pound moved to US $1.557, which is a drop of 0.1 percent. The euro fell about 0.8 percent against the UK pound during the day.