The euro continues to fall and settled under $ 1.21, undermined by Spain

Publié par Unknown mardi 24 juillet 2012

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The euro continued its fall against the dollar Tuesday, falling to a new low for two years in a market still plagued by worries about the financial situation of Spain, whose bond rates persisted at historically high levels.

Around 1800 GMT (8:00 p.m. in Paris), the euro bought 1.2053 dollars, against 1.2137 dollars around 2100 GMT Monday. It fell to 1.2040 dollars earlier, a new lowest level since June 10, 2010.

Similarly, the euro's decline accentuated against the yen at 94.27 yen against 95.13 yen the previous evening. He had tumbled to 94.24 yen Monday morning, its lowest level since November 2000.

The dollar was weakening against the yen at 78.15 yen against 78.37 yen late Monday.

"The euro area remains a central concern of the market, and in particular (...) Spain," said Kathleen Brooks, an analyst with Forex.com, noting that climate made "assets deemed risky (as the euro, Ed), more vulnerable to further declines. "

Investors fear more and more to see Spain forced to request outside assistance, while the recession deepens and many cash-strapped regions could seek support from Madrid.

After a formal request to that effect in Valencia, Catalonia, said Tuesday "studying" the possibility and experience severe difficulties.

"These regions of Spain calling the central government to the rescue were undoubtedly trigger a bout of weakness in the current euro", while fueling soaring rates at historic Spanish, commented Simon Denham, Capital Spreads analyst.

Borrowing rates in 10 years Spain remained well above Tuesday's 7% threshold, deemed to be unsustainable over time.

"The main concern is whether the European Union, the International Monetary Fund and the European Central Bank can afford a bailout for Spain. It is unclear whether the euro area could survive the collapse the fourth largest economy (the region), and this fear will weigh on the market a while, "said Ms. Brooks.

Greece also fueled market nervousness, his government this week meeting with a delegation of creditor institutions of countries (EU, ECB and IMF) to discuss the reforms needed to sustain their help.

In this context, the rating agency Moody's has revised Monday night to "negative" view of the public debt of Germany, the Netherlands and Luxembourg due to "increased uncertainty" about the crisis debt, further darkening investor sentiment.

Despite the brief support Tuesday by encouraging indicators of manufacturing activity in China, "the market still faces the dangers of escalating debt crisis in the euro area," noted Lee Hardman of Bank of Tokyo-Mitsubishi.

During Tuesday's classes Monday
1800 GMT 2100 GMT

EUR / USD 1.2053 1.2137
EUR / JPY 94.27 95.13
EUR / CHF 1.2010 1.2007
EUR / GBP 0.7777 0.7818
USD / JPY 78.15 78.37
USD / CHF 0.9960 0.9891
GBP / USD 1.5499 1.5521

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