Euro Down on Euro Zone Worries

Posted October 05, 2010

The euro fell Monday. New and old worries plague euro.


During the currency session on Monday, the euro fell against the US dollar. The euro fell from the six month highs it has been enjoying against the US dollar. All of this comes from the worries that the euro zone may not be as financially stable as it seems.


The euro was the focus of the day's trading, as it headed lower throughout the day. In particular, new information about Ireland's budget deficient sent investors to the sell off, though a hostile takeover bid for a US pharmaceutical company also played a role. On Monday, the European Central Bank stated that government bond purchases in the previous week were ten times the amount of the previous week. This pushed these purchases to the highest level since June. This purchasing was done to help improve the financial standing of Ireland and Portugal governments. 

Ireland's government stated that it needs to come up with some EURO 4.5 billion in savings in the budget for December. 


The Bank of Japan was holding a two day policy setting meeting that was set to end on Tuesday. That meeting also influenced the movements of the currency markets, as investors watched to see if the Japanese officials would intervene in the markets again as a way of holding back the yen's advancements. Nevertheless, the US dollar continued to stay around the Y 83.15 mark during the day's trading, which is also the location where the Bank of Japan intervened at previously.

Australian Dollar

With news that the Australian central bank was expected to tighten up its policy for the first time since the month of May, the Australian dollar fell during the trading day against the US dollar. It moved from its two year highs to US $0.9677. It is likely that the Reserve Bank of Australia will move its target rate to 4.75 percent to hold back inflation.

By the Numbers

During the currency trading session on Monday, the euro moved from US $1.3784 as of Friday to US $1.3690. The euro moved from Y 114.81 to Y 114.20. The US dollar moved from Y 83.32 to Y 83.44. The US dollar moved from CHF 0.9736 to CHF 0.9721. The UK pound moved from US $1.5841 as of Friday to UK $1.5837. The ICE Dollar Index moved the US dollar from 78.076 to 78.439.