HiFX: Foreign Exchange Specialists

• Headlines

5 February 2010

The euro hit a seven-month low against the dollar amid ongoing concerns over the fiscal health of some euro zone countries, with ECB President Jean-Claude Trichet predicting many members in the bloc will have large, sharply rising fiscal imbalances. The European Central Bank chief was speaking at a news conference after the ECB left its benchmark lending rate unchanged at 1 percent. Trichet said high public debt and deficits would place additional burdens on monetary policy. Worries over debt levels in Spain and Portugal have increased as investors speculate the two countries may face similar problems over budget deficits and debt as Greece has. In early New York trade, the euro was trading down 0.6 percent on the day at $1.3819, close to an earlier low of $1.3812, its weakest since June 2009. Weakness was partly attributed to widening in Greek, Portuguese and Spanish bond yield spreads over German benchmarks. Sterling trimmed some losses against the dollar after the Bank of England announced a pause in asset purchases under quantitative easing, as expected. It left the door open to more purchases should the outlook warrant it. The dollar hit a six-month high of 79.97 versus a basket of currencies, trading well above its 200-day moving average. The New Zealand dollar hit a five-month low after data showed the country's jobless rate hit a 10-year high while weak Australian retail sales data pushed the Aussie to a six-week low.

http://www.reuters.com/article/idUSLDE6131PG20100204?type=marketsNews