FX round-up: Spain worries drag on euro

Date: Thursday 31 May 2012

Heightened fears about Spain's economic outlook sent the euro below $1.24 on Wednesday while the safe haven dollar made further gains.

The single currency dropped to an intra-day low of $1.2360 before recovering a touch to trade at $1.2374 as investors digested yet more gloomy headlines on Europe.

Fears about Spain's banking systems had euro investors heading for the door as Madrid said it may tap credit markets for debt laden nationalised lender Bankia. Sentiment was hit by a Financial Times report that said the European Central Bank had rejected Spain’s plans to recapitalise the troubled lender.

Markets also mulled the abrupt resignation of Bank of Spain governor Miguel Angel Fernandez Ordonez following criticism of his handling of the Bankia crisis.

Fresh nerves about the deepening financial problems in Spain sent the nation's borrowing costs higher. Italy’s borrowing also lurched higher, with 10-year yields rising above 6% for the first time this year.

The dollar index, which measures the US currency against a basket of six major currencies, rose to 83.053 from 82.468 the previous session as safe haven demand increased.

The greenback fell to ¥79.09 from ¥79.49 as demand for the safety of the yen also spiked.

Meanwhile sterling fell to a four-month low against the dollar as worries about Spain's banking sector problems reduced risk appetite. Sterling traded at around $1.5565, down 0.5%.



CJ

Special promo:
Trading the Forex Market? Visit FXmania.com to get advanced infomation about currencies and the Foreign Exchange Market.

« Go back to news channel

Email this article to a friend

or share it with one of these popular networks:

• DIGG
• FACEBOOK
• STUMBLEUPON
• MIXX
• YAHOO BUZZ
• DELICIOUS
• REDDIT
• NEWSVINE