Euro falls vs dollar as EU crisis deepens
The euro tumbled against the dollar in early trading on Monday after European Union leaders failed to agree on a long-term budget, deepening a crisis triggered after French and Dutch voters rejected a proposed EU constitution.
In early Asian trade, the euro shed about one cent, halving the gain made on Friday when it hit a nine-day high as a record U.S. current account deficit sapped appetite for the dollar.
Friday evening brought in the much-awaited dollar sell off with readings showing that the US current account deficit climbed to record high at $ 195.1 billion against expectation of $190.0 billion in first quarter of 2005 or 6.4 percent of U.S. gross domestic product and up from $188.4 billion in the final quarter of last year.
Crude Oil jumped near record levels at 59 threatening further higher levels on supply concerns.
The euro fell as low as around $1.2170. That compares with around $1.2285 in late U.S. trade on Friday, when it rose as high as $1.2289.
The euro's fall also drove the Japanese currency down, with the dollar rising as high as around 109 yen from around 108.60 yen.
The break down at the summit threatened the 25-nation bloc with financial paralysis on top of the political uncertainty wrought by the referendum defeat in France and the Netherlands.
Traders said the huge deficit could make investors think twice about buying dollar assets, possibly capping the currency's advance in the near future.
Data from the U.S. Commodity Futures Trading Commission showed on Friday that speculators sharply increased their net short position in the yen and sterling against the dollar in the week that ended on June 14.
Outlook for the day
EUR/USD - Euro has picked up the momentum on the higher side and is expected to correct up to 1.2320 with support at 1.2230/40.
GBP/USD - Cable is also expected to rise against dollar and test the resistance at 1.8320. Immediate support comes at 1.8220.
USD/JPY - Yen is expected to weaken further against Euro and stay range bound against dollar. The range for the day is 108.40 – 109.30.
In early Asian trade, the euro shed about one cent, halving the gain made on Friday when it hit a nine-day high as a record U.S. current account deficit sapped appetite for the dollar.
Friday evening brought in the much-awaited dollar sell off with readings showing that the US current account deficit climbed to record high at $ 195.1 billion against expectation of $190.0 billion in first quarter of 2005 or 6.4 percent of U.S. gross domestic product and up from $188.4 billion in the final quarter of last year.
Crude Oil jumped near record levels at 59 threatening further higher levels on supply concerns.
The euro fell as low as around $1.2170. That compares with around $1.2285 in late U.S. trade on Friday, when it rose as high as $1.2289.
The euro's fall also drove the Japanese currency down, with the dollar rising as high as around 109 yen from around 108.60 yen.
The break down at the summit threatened the 25-nation bloc with financial paralysis on top of the political uncertainty wrought by the referendum defeat in France and the Netherlands.
Traders said the huge deficit could make investors think twice about buying dollar assets, possibly capping the currency's advance in the near future.
Data from the U.S. Commodity Futures Trading Commission showed on Friday that speculators sharply increased their net short position in the yen and sterling against the dollar in the week that ended on June 14.
Outlook for the day
EUR/USD - Euro has picked up the momentum on the higher side and is expected to correct up to 1.2320 with support at 1.2230/40.
GBP/USD - Cable is also expected to rise against dollar and test the resistance at 1.8320. Immediate support comes at 1.8220.
USD/JPY - Yen is expected to weaken further against Euro and stay range bound against dollar. The range for the day is 108.40 – 109.30.
posted by Wise Money @ 8:19 AM
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