Forex Market Review – Euro dips after Merkel comments

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Euro dipped to more than a two week low against the dollar after German Chancellor Angela Merkel said Europe will not have shared liability for debt during her lifetime.  The single currency was already under pressure during the day due to rising Spanish bond yields. Further dampening sentiment was Moody’s downgrade of Spanish banks.

 

Meanwhile, ahead of the EU summit on Thursday and Friday, hopes are fading for any success. Investors are preparing for disappointment as they do not expect any solutions to the euro zone debt crisis at this summit especially after Germany’s opposition to joint euro bonds.

 

EURUSD  dipped to a low of 1.2441 in late U.S. trading, the lowest level since June 8. It later stabilized above 1.2480.

 

Yen was stronger against the dollar and yen today as a result of safe haven flows due to loss of investor confidence from the turmoil in Europe. USDJPY fell to 79.25 before steadying above 79.37. Euro is down 2 percent against the yen since Monday, with EURJPY touching as low as 98.73 today.

 

The Australian dollar rebounded after touching its weakest level in more than a week yesterday. AUDUSD rose to 1.0082 from 1.0010.