BLBG:Euro Falls to 15-Month Low Versus Dollar Before French Sale; Yuan Weakens
The euro fell to a 15-month low against the dollar on concern the region’s governments and banks will struggle to raise funds as France prepares to sell bonds today.
The 17-nation currency approached an 11-year low against the yen and slumped versus most major peers after Greek Prime Minister Lucas Papademos warned his country may face economic collapse as soon as March. The Australian and New Zealand dollars weakened against the greenback as losses in Asian stocks (MXAP) sapped demand for higher-yielding assets. The yuan dropped after China’s central bank lowered the daily reference rate by the most since November.
“There will be steady pressure on the euro in terms of rolling over existing debt and issuing new debt,” said Sean Callow, a senior currency strategist at Westpac Banking Corp. in Sydney, Australia’s second-largest lender. “There’s really been nothing that would make you want to even play for an interim bounce in the euro.”
The euro weakened 0.5 percent to $1.2875 at 9:38 a.m. London time, after falling as much as 0.7 percent to $1.2848, the least since September 2010. Europe’s common currency dropped 0.4 percent to 98.90 yen, after reaching 98.68 yen. It touched 98.66 yen on Jan. 2, the weakest since December 2000. The dollar was little changed at 76.80 yen.
The euro slid 2.9 percent over the past month, the worst performance among the 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes, as investors sought safety amid the region’s turmoil. The dollar rose 1.5 percent and the yen climbed 3 percent.
France will auction bonds maturing from 2021 to 2041 today after yesterday’s German sale of 10-year bonds attracted weaker demand than the average over the past five years.
France’s credit outlook was lowered by Fitch Ratings on Dec. 16 on the “heightened risk of contingent liabilities” from the escalating euro-region crisis. Standard & Poor’s is reviewing the top ratings of both France and Germany.
To contact the reporters on this story: Candice Zachariahs in Sydney at czachariahs2@bloomberg.net; Keith Jenkins in London at kjenkins3@bloomberg.net
To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net
