Euro Tumbles on Southern Regional Budget Deficits

The euro slid today versus virtually all of 16 main traded currencies on foreign-exchange markets as some Eurozone member countries raising budget deficit is still affecting attractiveness for assets in the region, in a day were commodity linked currencies outperformed most currencies as risk appetite returned to markets.

The euro was affected today as new events coming from Portugal and Greece fueled emerging fears that these southern European nations won’t be able to avoid a deeper credit crisis in both countries, which also affected equities in these nations’ banking sector, since important investment groups throughout the world are avoiding assets in the region. The euro touched the lowest level in 6 months versus the dollar, even if the U.S. currency declined versus most of higher-yielding currencies, after Federal Reserve made a statement yesterday with an optimistic tone towards the economic recovery in the country that sparked risk appetite in foreign-exchange, stocks and commodities markets.

Concerns regarding public accounts in several European countries using the euro like Greece, Portugal, Spain and Italy are pushing the single currency down, and unless effective measures to contain these nation’s budget deficit take place, the euro will reach new record lows versus key-currencies in the following weeks.

EUR/USD traded at 139.58 as of 16:36 GMT from a previous intraday rate of 1.4035. EUR/JPY fell to 125.12 from 125.58 yesterday.

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