The euro touched its lowest level in two years before regional finance ministers gather in Brussels today to discuss crisis-fighting measures adopted by heads of government at a summit last month.
The 17-nation currency failed to rally for a fourth day before European Central Bank PresidentMario Draghi addresses the European parliament today. The yen advanced versus most major counterparts after Japan released trade data for May and as Asian stocks declined, boosting demand for haven assets. Australia’s dollar dropped after Chinese Premier Wen Jiabao said downward pressure on the economy is still “relatively large,” the official Xinhua News Agency reported yesterday.
“The risk around the finance ministers’ meeting is that we see more cracks appearing in European unity and perhaps a delay in implementation of the measures agreed on at the summit,” said Mike Jones, a Wellington-based currency strategist at Bank of New Zealand Ltd. “That’s taking some toll on the euro.”
At a summit in June, euro-region leaders agreed to relax conditions on emergency loans for Spanish banks. “We have to move quickly on banking supervision and we have to move quickly on the direct recapitalization of Spanish banks,” French Finance Minister Pierre Moscovici said yesterday.
ECB President Draghi is scheduled to speak in Brussels today after he and fellow central bank policy makers cut the main refinancing rate to a record low 0.75 percent on July 5. Draghi said after last week’s decision the cut may have only a “muted” economic impact and growth in the euro area “continues to remain weak with heightened uncertainty.”
The euro will “probably head down towards the $1.21 support level within the next week and a half,” Andrew Su, the Sydney-based chief executive officer of Compass Global Markets, said in a Bloomberg Television interview today. It may then test the low reached in June 2010 within the next couple of months, Su said.
Source: Bloomberg News