Posted March 25, 2010
In Wednesday trading, the euro struggled and fell to a 10 month low against the US dollar. Greek debt plagues the currency markets for yet another day.
On Wednesday, the euro had another bad day as it fell to a 10 month low against the US dollar. For yet another currency trading session, the European Union was the main focus of the difficulty of the currency movement. In particular, currency traders waited to hear what plan would be brought to the table to deal with Greek debt.
The 16 nation currency dropped against ten of the 16 major peers. The drop in the euro began when Germany’s Christian Democratic Union party representative Michael Meister told a French newspaper that the International Monetary Fund was the best and only option to help Greece.
Investors and strategist fear that the worst for the euro is yet to come with some believing that it will hit as low as $1.30 within the coming months. The European Union meeting is unlikely to provide any reassurance to these concerned investors either.
The biggest fear is that a large bailing out of Greece’s debt will destabilize the country in total. Further, if the IMF is the only option for the struggling company, this shows that the European Union is unable to keep its house in order, which is seen as significant risk across the board.
At the start of trading on Wednesday the euro was at $1.3322 from $1.3315. It feel as far as $1.3284. That number is the lowest number since May 7, 2009. The yen moved from 92.30 on Tuesday to 91.90. It also fell to a low point of 92.40. That drop is the lowest number since January 12th. The euro also moved from 122.89 yen to 122.43 yen in Wednesday trading.
The euro also moved to a record low against the Swiss franc on Wednesday trading. That occurred after ratings organization Fitch Ratings cut Portugal’s credit rating. That ratings drop is significant for Portugal, but it is also a likely signal that other European Union countries will face similar drops and downgrades as the Greek crisis continues and even spreads to other countries in the euro zone. The Euro moved from 1.4285 to 1.4271 on Wednesday. It feel to a low point of 1.4233.
In addition, the US dollar fell against the Japanese yen, to a 10 week low. The main movement factor behind this was speculation that Japanese exporters took advantage of the fall to bring back home funds before the country’s fiscal year ends. This was the biggest fall since December 2009. The fiscal year ends next week. The Dollar Index moved to a ten month high.
In other news, the losses against the US dollar in Wednesday trading were lower mainly because yields on the government debt increased. The increase was due to the economy improving which is likely to lead to the Federal Reserve to end the incredible stimulus measures it has taken since the financial crisis was underway. It is likely that the Federal Reserve will be able to end these stimulus measures prior to the country’s major counterparts are able to do so.