Euro is lower today in Forex trading, thanks to higher bond yields in some countries, and to disappointing economic news. It looks increasingly as though EU leaders will be unable to contain the debt crisis, and markets are responding accordingly.
One of the biggest issues right now is that bond yields are rising in the eurozone. Italian bond yields continue to rise — even after the ECB bought some bonds last week in an effort to slow the rise. Spanish bond yields are also rising. And, spreads between German Bunds and French, Dutch, Austrian and Belgian bonds are all rising.
These rising bond yields make it difficult for countries to turn their sovereign debt over into something affordable, and that makes the risk of default greater. Of course, that greater risk of default in turn pushes bond yields higher, perpetuating the cycle.
Also adding to the difficulties is the economic data from Quarter 3. The eurozone economy grew only 0.2 percent during the last quarter, with Germany and France unable to prop up the eurozone as countries suffering from the sovereign debt crisis weighed on the economy. With austerity measures in place in many countries, there is not spending to goose economic growth. The sovereign debt crisis is likely to weigh on the euro for some time.
At 13:40 GMT EUR/USD is lower, down to 1.3560 from the open at 1.3635. EUR/GBP is also lower at 0.8542, down from the open at 0.8568. EUR/JPY is down to 104.3985 from the open at 105.0745.
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