Euro exchange rate: It's a tough day for the single currency which remains entrenched in a down-trend

Details

Published on Friday, 10 August 2012 12:54

Written by Sam Coventry

International Money Transfers at our sister site

"We continue to feel that old market adage of the trend (lower, in this case) being your “friend” applies very clearly with respect to EUR/USD" - TD Securities.

The euro (Currency:EUR) continues to find the going hard as we head into today's US session.

The euro dollar exchange rate is 0.37 pct down on a day-by-day basis at 1.2261.

The euro pound exchange rate is 0.1 pct lower at 0.7861.

"We continue to feel that old market adage of the trend (lower, in this case) being your “friend” applies very clearly with respect to EUR/USD.  We think short-term gains are liable to be limited to the upper 1.22s/low 1.23s from here and that a push below the 1.22 area in the next week or two is liable to see the EUR sell off pick up momentum again," notes analyst Shaun Osborne at TD Securities.


This morning saw Fitch cast doubt on whether the memorandum of understanding between Spain and eurozone governments to bail out Spanish banks will be the last we hear of the issue.

The 100bn EUR loan to recapitalise lenders was signed off last month but Fitch believes the "far-reaching" reforms attached to the deal might not be the last.

Losses could be imposed on senior debt holders and retail investors could launch lawsuits, Fitch says.

Maria Jose Lockerbie, a managing director at Fitch, says:

"While the MOU is clearly intended to be the final reform of the Spanish banking sector, Fitch is cautious about whether this will actually be the case, given the very tough economic and market conditions in Spain."

On the eco front we see that output at French factories stalled in June, according to official data this morning. The official French statistics body said overall industry output was unchanged on the previous month, while manufacturing output inched up 0.1%.

This all appears to back Bank of France estimates that GDP slipped by 0.1 pct in the second quarter (if that occurs in Q3 too then France would be joining the UK in recession).