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Forex - Euro hit by downgrade fears, North Korea news

Published 12/19/2011, 05:43 AM
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Investing.com - The euro was mixed to broadly lower against its major counterparts on Monday, as the risk of credit ratings downgrades across the single currency bloc and news of North Korean leader Kim Jong il's death weighed on market sentiment.

During European morning trade, the euro was lower against the U.S. dollar, with EUR/USD slipping 0.14% to hit 1.3023.

The dollar remained supported by the North Korean news, as uncertainty over the future leadership of the state sparked fears over geopolitical instability in northeast Asia.

Meanwhile, concerns over credit rating downgrades across the euro zone continued after ratings agency Fitch put six euro zone countries on review pending possible downgrades on Friday and revised its long-term outlook on France’s triple A rating to negative from stable.

Over the weekend, European Central Bank President Mario Draghi reiterated his opposition to intervening in the bond markets and buying up sovereign debt in order to ease the region’s debt crisis in an interview with the Financial Times.

But the euro pushed higher against the pound, with EUR/GBP adding 0.21% to hit 0.8407.

Earlier Monday, a report by the U.K.’s largest property website Rightmove showed that house price inflation fell 2.7% in December after a 3.1% decline the previous month.

The single currency inched higher against the yen but slipped against the Swiss franc, with EUR/JPY easing up 0.04% to hit 101.46 and EUR/CHF sliding 0.16% to hit 1.2188.

In Japan, Finance Minister Jun Azumi said he would monitor financial market moves following the death of Kim Jong il.

Also Monday, Japan’s government said it planned to trim its initial budget for the next financial year back to JPY90 trillion from this year's record of JPY92 trillion.

Elsewhere, the euro was broadly lower against the Canadian, Australian and New Zealand dollars, with EUR/CAD shedding 0.36% to hit 1.3493, EUR/AUD rising 0.15% to hit 1.3086 and EUR/NZD losing 0.18% to hit 1.7094.

Earlier in the day, data showed that the Westpac Banking Corporation’s index of consumer sentiment in New Zealand declined in the fourth quarter on concern the European debt crisis may lead to a global economic slowdown.

European Union leaders were to hold talks later Monday, to discuss measures aimed at resolving the region’s ongoing debt crisis, including the possibility of European nations lending EUR200 billion to the International Monetary Fund.


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