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Euro lower as European election results weigh

Published 05/07/2012, 06:46 AM
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Investing.com - The euro dropped to a three-and-a-half year low against the pound on Monday, and hit multi-month lows against the U.S. dollar and the yen as the weekend’s Greek election results fanned fears over the country’s future in the euro zone.

During European late morning trade, the euro was down against the U.S. dollar, with EUR/USD shedding 0.42% to hit 1.3028.

The euro found some support after official data showed that German factory orders rose by a seasonally adjusted 2.2% in March, easily surpassing expectations for a 0.5% increase.

But market sentiment remained dominated by fears that the weekend’s election results in Greece and France would hamper attempts to resolve Europe’s debt crisis.

In Greece, neither of the two pro-bailout parties secured enough votes to form a majority in parliament, as voters favored smaller parties who campaigned against the harsh government austerity program.

The results threw the future of the country’s international bailout agreement into doubt and fuelled fears over a possible Greek exit from the euro zone.

Meanwhile, French President Nicolas Sarkozy was defeated by socialist candidate François Hollande, who has said he wants to renegotiate the euro zone fiscal pact in order to stimulate growth in the region.

The single currency was trading within striking distance of a three-and-a-half year low against the pound, with EUR/GBP losing 0.52% to hit 0.8059.

The euro was hovering close to a two-and-a-half month low against the yen, with EUR/JPY losing 0.46% to hit 103.99, but remained little changed against the Swiss franc EUR/CHF dipping 0.01% to hit 1.2011.

Earlier Monday, government data showed that the rate of unemployment in Switzerland came in at 3.1% in April. A separate report showed that Swiss consumer price inflation rose less-than-expected in April, adding 0.1%, against expectations for a 0.2% increase.

The shared currency was weaker against the Canadian, Australian and New Zealand dollars, with EUR/CAD down 0.44% to hit 1.2975, EUR/AUD shedding 0.42% to hit 1.2795 and EUR/NZD sliding 0.34% to hit 1.6384.

The Australian dollar found support after official data showed that domestic retail sales rose more-than-expected in March, adding 0.9%, beating expectations for a 0.3% increase.

The data came after a separate report showed that building approvals in Australia jumped 7.4% in March, above expectations for a 3.2% rise.

Trading volumes were expected to remain light on Monday as markets in the U.K. were closed for a bank holiday.

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