Euro Down As Euro Area Debt Concerns Resurface

Euro Down As Euro Area Debt Concerns Resurface


The euro extended last week's downtrend against other major currencies in early deals Monday as a weaker-than-forecast German business sentiment survey, reports of differences between Germany and France over plans to monitor Europe's crisis-hit banks, uncertainty over progress in Greece's latest budget cuts and continued concerns over the future of Spain prompted traders to move away from risky-bets.
Meanwhile, a report that appeared in Der Spiegel on Sunday showed that Eurozone countries are planning to increase the size of the region's permanent bailout fund dramatically. The governments are preparing to quadruple the capacity of the European Stability Mechanism to 2 trillion euros from the current 500 billion euros, the magazine reported citing a Finance Ministry spokesperson.
The common currency came under pressure amid reports that Greece has an estimated budget gap of EUR 20 billion, almost double from Troika's previous projection, posing a major hindrance for the debt-ridden nation in order to access the next tranche of bailout money.
German business sentiment declined for the fifth consecutive month in September, reports said citing survey results from Ifo Institute. The business climate index fell to 101.4 from 102.3 in August, while it was forecast to remain unchanged at 102.3.
Growth worries from China also garnered investor attention after Song Guoqing, an academic adviser to the People's Bank of China, said he saw no signs of a rebound in the third quarter and domestic investment is unlikely to expand dramatically in the short term.
The China Beige Book survey of more than 2,000 executives showed that manufacturers and retailers are less optimistic about sales than they were three months ago, adding concern over the red-dragon's monetary strength.
The euro reached a 10-day low of 100.64 against the yen, down from last week's close of 101.45. The euro-yen pair is presently wroth 100.65 with 99.80 seen as the next likely downside target level.
Around 8:30 am ET, the euro fell below the key 1.29 level against the dollar for the first time since September 13. The euro-greenback pair is presently worth 1.2892 with 1.2850/55 area seen as the next likely support level.
The single currency also resumed its Asian session downtrend against the pound, falling as low as 0.7957 around 4:40 am ET, its weakest level since September 7. If the euro weakens further, likely target is seen around the 0.7930 level.
The European shared currency slipped to a 4-day low of 1.2088 against the Swiss franc in early deals and the pair held steady thereafter. The euro-franc pair recovery since the beginning of this month has already stalled and the cross is set to finish the retracing mode around the SNB peg of 1.20.